A system of private banks ensures stability without a central bank

Summary:  In the late eighteenth and early nineteenth century, Scotland had a stable financial system. Its stability arose from the pressure that private banks, which had the right to issue bank notes, placed on each other to behave prudently. Unlike in England, the Scottish banking system had no central bank. If one bank within the ... Continue reading

SMPC votes unanimously to raise bank rate this month

For a second consecutive meeting (16th January), the Shadow Monetary Policy Committee (SMPC) voted unanimously to raise Bank rate in February. Six of the nine wanted to see a rise of ¼% and three an increase of ½%. Furthermore, there was a unanimous bias to tighten. One wanted to see QE reversed, worried about the ... Continue reading
Economic Theory
There is much talk of a "Bitcoin bubble." However, it is not clear that the idea of digital currencies is widely understood. What are they? And why might their prices vary? How should a person of faith look at the moral issues Bitcoin raises? Ethical questions might be raised about the soaring price of something ... Continue reading

IEA & John Mills publish report on the pros and cons of devaluing the pound

Foreword: John Mills is one of Britain’s most stimulating economic thinkers. Unusually, he has many decades of practical business experience and is also more commonly associated with the political left than the right. It is therefore an immense pleasure to engage with him on some of the most important challenges facing the UK economy today. ... Continue reading

Julian Jessop appears on BBC Newsnight

Julian Jessop, Chief Economist at the Institute of Economic Affairs has appeared on BBC Newsnight to discuss the Bank of England's interest rate rise. In the interview Julian argues that ultra low interest rates have their costs as well as their benefits. If you are in a position where interest rates are expected to remain ... Continue reading

Julian Jessop comments on BoE interest rate rise

Commenting on the Bank of England raising interest rates by 0.25%, Julian Jessop, Chief Economist at the Institute of Economic Affairs, said: "The Bank of England made the correct decision today and should be ready to raise interest rates further next year, provided the economy continues to weather the impact of Brexit better than most ... Continue reading
Monetary Policy
The Bank of England is likely, though not certain, to raise its official interest rate on Thursday. Many commentators think a rate hike now would be a mistake. In contrast, the Shadow Monetary Policy Committee, a group of independent economists meeting at the IEA, has already voted unanimously for an immediate increase. (I backed a ... Continue reading
In its e-mail poll for September - the Shadow Monetary Policy Committee (SMPC) voted by eight votes to one to raise Bank rate. This decision marks the 4th consecutive month that the committee has voted for a rise by this margin. The overwhelming consensus amongst members is that the economy is expanding fast enough to ... Continue reading