With a grant of €50,000, Janosch will research the justifications for the money creation powers of commercial banks in the Eurozone, as offered by bankers, their public supervisors, and civil society organizations working on monetary reform. These justifications matter to the wider public because commercial banks are responsible for ca. 95% of money creation today by providing credit. They decide about their extension of credit based on profit calculations.

This means that commercial banks’ profit calculations considerably shape which kinds of projects go ahead. And while this money creation is driven by private profit calculations, it is stabilized and backstopped by public authority and resources. What does this mean for the justifiability of these money creation powers? The project investigates how could these powers are justified and how these justifications should be evaluated in terms of their compatibility with democracy.