*William Saas:*So your project, as we understand it, is to design a
digital fiat currency system that radically restructures finance around
public and environmental interests and severely contrasts, or in
Keynes’s words, euthanizes the private rentier banking system. But
before we get too deep into those weeds, would you mind giving our
listeners a brief introduction to the present structure and perverse
workings of the private, for-profit banking system?
*Rohan Grey:*Yeah, I mean, how much time do you have? My advisors at
Cornell, where I’m doing my legal PhD at the moment, Robert Hockett and
Saule Omarova, have written a very good piece that goes into this in a
fair bit of detail called, “The Finance Franchise.” Essentially, their
argument is that the commercial banking system, with all of these
chartered banks, when they make loans, they don’t just take the money of
people who’ve deposited money at that bank and lend that money out. You
give me $100, I lend $50 to Billy, blah, blah, blah. Actually, what
happens is they extend credit, and they get support from the central
bank, which in turn is backed by the rest of the government. And in
doing so, they’re creating new purchasing power and new forms of bank
deposits that function with money and properties. So in that sense,
they’re essentially engaging in fiscal activity. They’re extending the
full faith and credit of the government to new forms of investment, new
forms of spending, in ways that are, in theory, in accordance with a
kind of public purpose, or a public-private partnership model. And you
have a whole range of macroprudential regulations and microprudential
regulations about the kinds of loans that banks should be able to issue
and the purposes for those loans, etc.
https://mronline.org/2021/07/01/digital-money-beyond-blockchain-with-rohan-grey/
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