In his masterpiece of a book “Debt- the First 5000 Years”, David Graeber concludes in the final chapters with what is a prediction and a challenge. The prediction is that we are at the early stage of a new age in the history of debt and money which is likely to last 500 or 600 years. The challenge is to imagine what it will look like and he asks us to try and re-imagine what our monetary system could look like.

This paper is an attempt to describe what this new system might look like. In creating this outline of a possible future banking and monetary system to replace the one that has evolved over the last 30 years or so, in tandem with the evolution of capitalism, I have applied the fundamental tenets of Modern Monetary Theory (MMT). That is those elements which contain universal truth, but not those elements that form the “superstructure” of empirical narrative which is MMT’s description and analysis of the existing system, which we have inherited during the evolution of capitalism and its associated banking and monetary system. I am firmly of the view that most advocates of MMT fail to see that what it describes is a contingent product of history and not a universal, inevitable phenomenon and, as a result, they fail to see that MMT is also a tool for re-imagining the future and for designing a replacement system.

What follows is essentially the new algorithm which could drive the banking and monetary system through a phase transition and into the new age of which David Graeber speaks so eloquently. I am sharing these ideas now as I see this re-imagining process as a collective one. This is an attempt at starting the conversation. 

The New Algorithm:

Primary Institutions

(1) central bank, (2) Government (Treasury),(3) National Investment Bank (government owned), (4) Mutual  banking sector: 4.1 – personal banking; 4.2 – business banking (5) a National Pension & Investment Fund (6) National Credit Risk Fund (government owned) (7) National Stock Exchange (government owned)


(3) provides loan capital and banking services to businesses (including insurance companies and private pension funds)


(4.1) provides loans and banking services to private citizens and gateway to gilts issues via the Stock Exchange (7)

(4.2) provides banking services to business and acts as gateway to capital from the NIB, NPIF and Stock Exchange (3,5 & 7) also a gateway to the Stock Exchange for purchase of gilts

(5) provides equity capital to businesses (established and new start ups), also lends to government (bond/gilt purchases)

[NOTE: I have written a separate detailed proposal for an NPIF and the Abstract of that paper was published on Progressive Pulse on September 6th 2020.]

(6) Underwrites credit risks for (3) and (4) – the levy of a credit risk premium replaces interest charges on loans

System rules

Only (2,3+6) pay interest on public debt. All loans provided by (3) and (4) are interest free but (3)+(4) can charge fees for providing banking services and pass on credit risk insurance costs to borrowers

(4) operates on a full reserve banking basis. Account holders are able to purchase government bonds/gilts and earn interest at a rate set unilaterally by the government.

The fact that only government, the NIB and the NCRF pay interest on their public debt means (5); the NPIF, as well as companies and private individuals can earn interest by lending to the government the NIB and the NCRF. This is a source of new reserves…the interest can only be paid by creating new central bank debt (new money creation).

(3) and (6) can be capitalised by creating new reserves in the form of new central bank debt,   or by the government issuing bonds for the purpose of financing the NIB and NCRF

 Secondary Institutions

(8) Insurance companies; (9) private banks; (10) Private pension funds

(8) (9) and (10) remain in private ownership and can obtain returns from purchase of government bonds and/or from purchase of company equity (shares) either in IPOs or in the secondary markets. These transactions are facilitated in (7) the Scottish Stock Exchange. (8) and (9) are capitalised by equity share holdings and/or direct equity investment partnership with (5), the NPIF. (10) are savings derived  funds.

Companies (including insurance companies) wishing to raise either loan or equity capital via the Stock Exchange must comply with strict listing rules aligned with a new Company Code and Companies Act (these provisions will set out the terms of a ”licence to operate” for companies in Scotland).

Companies are unlikely to issue corporate bonds as they can access interest free loan capital from the NIB, but there may be circumstances where the NIB refuses a loan or the company considers the risk premium required is too onerous and then seeks loan capital from a corporate bond issue in the Stock Exchange at a lower cost of capital (7).  Private investors will need to have a large risk appetite, however, if they choose to provide capital to a company which has been unable to access capital via the NIB or NPIF.    

This model implies a high degree of control by government over the economy and the banking and monetary system. This means that it must operate within the framework of a wider Constitutional settlement which establishes a high level of democratic accountability to ensure that the outcomes meet the needs of all citizens individually and collectively. It also should function in close tandem with a sophisticated economic policy and industrial strategy. This is a banking and monetary system designed to facilitate carefully crafted policy.


  1. Gerry Toner -

    This is a money solution for money thinking. This is evidence of a new bourgeois revolution that integrates the state fully as the core capitalist agent. The state will as it does today dictate to the population.
    The purpose of the money system must be to support the production and and reproduction of human life systems. Money has facilitated producers in exchange for sustaining their lives with expanding material gains for centuries. Debt existed before money. Both emerged to serve the people. This proposal is no doubt a technical fix but it is a bourgeois fix designed to secure money as a corrupting dominant variable dictating to humans. Graeber would see it anthropologically as a development, different from today but flawed. The state must wither, if not it is then the subject of capture and that is the weakness of the capitalist state.

  2. Jim Osborne -

    Gerry, those comments suggest you have not really thought through the effects of the system design. How is it a “bourgeois revolution” to eliminate usury from the banking system? Is your solution to the challenges we face to abolish money altogether?

    1. Gerry Toner -

      Money does not exist, humans invented it. The great attribute of money is its immanence, immateriality and its accessibility. Exchange and the commodification of exchange established the basis for money. Your use of the concept ‘system design’ reflects a bourgeois revolution. That is top down thinking; money was not ‘designed’; it evolved as parasitic variable with exchange. Money has proven itself as has the market to be valued in everyday life not be design but by being practical. A cloud based database can now do that; an no central bank needed. The money central banks are concerned about is fiat money, tax/rent collecting by the state; in other words control of the value creation and distribution process. Your system I think will possibly be a very good idea but it is a new model of money for a new revolution within capitalism. I do think this is the more likely development than some overthrow of capitalism. The bourgeois is a product of revolution and the birth of capitalism it cannot see anything else. It cannot see that money is a shimmer.

  3. Jim Osborne -

    Its not really an “invention” …its is a natural aspect of human relationships and pre-dates commodification of exchange. “System design” involves a reconfiguration of the relationships. Money is a flow of mutual rights (credits) and obligations (debts) between human beings. The flow is invisible except when it is recorded in the form of accounting systems (which might be a cloud based recording system – easy to envisage that since current recording is done on computers anyway) . “Rewiring” involve reconfiguration of the pathways of the flows of credits and debts and doing it requires changes in the operating rules….in my proposal the key rule change is the abolition of usury and the elimination of rentier banking. This on its own will push the way the economy works on to a new trajectory, evolving away from capitalism which is based on an unequal power relation between capital and labour. The economy and the course of history will evolve this way without any “top down control” – the creation of the new rules just shapes the way things evolve. To me this is the manifestation of the Marxist idea that the transition towards communism involves the “withering away of the state”. So its a peaceful revolution…..any violence that may occur would only be instigated by the forces trying to prevent the change from happening. A lot of Marxists seem to think all we need to do is abolish money….I strongly disagree – money as a debt/credit relationship between human beings can only be abolished by abolishing humans… Pol Pot tried to do.

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