Making Money Public: A Simpler, Fairer Foundation for a Democratic Economy

Few would deny that finance plays a decisive role in shaping a future where human life on Earth remains viable. Yet debates on economic transformation often overlook a crucial dimension: aligning credit and capital with social and ecological value is only possible if we change how money itself is created and who controls that process. It is fundamental for building a democratic economy that serves both people and planet.

Across the world, money creation follows a remarkably uniform logic. The only form of digital public money—central bank reserves—is created through debt, used exclusively by private banks, and managed indirectly through interest rates and asset purchases. Everyone else uses private bank deposits, which are liabilities of commercial institutions. It is a deeply entrenched model, one that binds the very existence of money to private balance sheets and perpetual debt expansion.

The issue of money creation is both technical and political, and for that reason it is often neglected. Yet without transforming the way money comes into being, reforms to finance will always remain partial and fragile. Today, public digital money exists, but only for banks. What we call “central bank money” is public in name but private in practice, since it circulates only among financial institutions. Households, businesses, and even many governments must rely on private credit to access the money they need to function, and this money rests on the assumption that banks can’t ever go bust.

This structure locks the public into dependence on private risk-taking. Deposit guarantees, bailouts, privileged access to central bank liquidity, and interest payments on reserves are all mechanisms designed to protect a financial system on which society depends for its means of exchange. The result is asymmetrical: profits are privatized, while risks are socialized.

There are proposals to expand state control over lending decisions—so-called “green finance” or credit guidance schemes—but these remain partial solutions when considering the true costs for this system. They leave untouched the core problem: money itself continues to be issued as private debt. Rather than multiplying state intervention in credit allocation, a more decentralized approach is to make money creation itself public, while allowing a plural and competitive ecosystem of credit institutions to thrive on top of it.

The simplest step, and one that could be implemented incrementally, would be to create a public, debt-free digital currency issued by a public authority and accessible to everyone, not just banks. In practical terms, every citizen and enterprise would be able to hold and use this public money through digital wallets provided directly by the state or via authorized intermediaries acting as such. It would function alongside existing private bank money, but without privileges or guarantees for the latter.

Such a non-reformist reform would immediately end many of the contradictions that plague the current architecture shifting power from the financial system to society. People’s money would no longer depend on bank solvency, eliminating the need for deposit insurance or taxpayer-funded rescues. The state would no longer have to subsidize banks through privileged access to interest bearing central bank reserves. Seigniorage—the profit from creating money—would accrue to the public, not to financial intermediaries, thus reducing the need and cost of public debt. Not only would we get a one-time huge income from changing from private money into public one, but also we would continue receiving the benefits of continued monetary expansion. Private institutions could still lend, take risks, and even fail, but without threatening the entire monetary system when they do.

This idea differs from the approach advocated by proponents of Modern Monetary Theory (MMT) even though they share a common goal: to shift the power of money creation from private banks to the public. MMT typically envisions new money entering circulation through public spending, for instance financing a job guarantee or an energy transition. By contrast, the approach outlined here proposes that new public money could enter circulation through citizens themselves, as a form of universal, debt-free income. This would democratize monetary power, allowing people to decide whether to spend or lend, while fiscal policy and taxation steer those choices toward socially and ecologically desirable activities. And there are many design options on the table, where the state could still receive newly created money to finance essential projects, but we could also favor that citizens could hold a share of monetary sovereignty in their own hands.

This is not an argument against public investment or collective priorities. On the contrary, by giving everyone access to safe, state-issued digital money, we create the conditions for more effective public policy. Once money creation is public, fiscal, regulatory and financial tools gain both resources and independence. Fiscal policy can define which sectors are most desirable by making them more profitable or affordable, while regulation can focus on outcomes—social justice, decarbonization, equality—rather than on maintaining a fragile financial stability.

A public digital currency would also make the financial system more resilient. Local and cooperative credit institutions could lend without depending on the infrastructure of large commercial banks. Because public money would be risk-free by design, the safety of the payment system would no longer depend on the solvency of private intermediaries. Financial crises would lose their hostage logic: no longer would societies be forced to “save the banks or lose everyone’s savings.”

Critically, this is not a call for centralization. A public monetary foundation actually enables more decentralization, because it separates the safe medium of exchange from the risky process of credit creation. It offers a platform on which plural credit systems—cooperative, municipal, community-based—can coexist and innovate. Public money does not decide who gets credit; it simply ensures that the basic means of payment is safe, fair, and public.

Turning to the European context, such a transition could evolve naturally from the ongoing debates about a digital euro. If designed appropriately, a European public digital currency could gradually open access to central bank reserves, step by step reducing the privileges and protections that commercial banks currently enjoy. Its mere existence would change the balance of power: in future crises, the public could rely on a parallel, public payment system, making it politically and economically feasible to let failing banks actually fail.

The political process to get there need not be utopian. A proposal to make money public can unite unusual allies—liberals, conservatives, enterprises, consumer associations, payment providers, and even parts of the tech industry—since all stand to benefit from a more open, stable, and competitive monetary infrastructure. The only consistent opposition would likely come from the incumbent banking lobby. In practice, Europe’s central bank could take the first step by implementing a Central Bank Digital Currency (CBDC) designed for universal access and genuine parity with bank money, while future reforms could expand its functions toward a fully public, debt-free currency.

Once money creation becomes a public utility, the elaborate machinery of guarantees and exceptions built to keep the current system from collapsing could be simplified. Monetary policy could return to its core purpose: ensuring that the flow of money serves collective well-being rather than private accumulation. Central banks would not become omnipotent planners, but rather public registers of money creation, expanding the supply when needed by transferring it directly to citizens or the public purse.

This reform may sound radical, yet it is remarkably practical. Many of the technical requirements are already being developed through existing digital currency projects. What is needed is not new technology, but new political imagination—the courage to treat money not as a by-product of private credit, but as a public common good.

In a time when societies struggle to agree even on modest reforms, the simplicity of this proposal is its greatest strength. A public, debt-free, universally accessible digital currency offers a shared foundation on which diverse movements—economic, social, ecological—can converge. From there, we can build the next steps toward a democratic economy that not only allocates credit more wisely, but ensures that the very money we use truly belongs to all of us.

The opinions expressed in the text do not necessarily reflect those of R&D, but are those of the authors.