This proposal describes the use of central bank money creation to finance investment in social and ecological goals, and the development of publicly issued digital currencies, within a framework of enhanced coordination between governments and central banks. Private financial systems are ill-equipped to finance the investments necessary for poverty alleviation and the ecological transition, and create frequent bouts of instability that pose particular challenges for the post-growth transition. A far larger role for democratically-governed public investment is needed, alongside measures to guide the allocation of private credit creation in line with social and ecological priorities, and reduce allocation to harmful activities. However, in high-income countries, public investment is often limited by restrictive fiscal policy, whilst low-income countries lower down the currency hierarchy face severe external constraints as a result of structural inequalities in the global economy. With robust and democratic governance structures in place that safeguard price stability, central banks and governments can cooperate to use central bank money creation as part of a range of tools to facilitate needed investments. This may take various forms, including central banks directly financing public investment or indirectly via supporting government bond markets; financing publicly-owned development banks; and financing private expenditure by households, firms and non-profit institutions. Publicly-issued digital money (central bank digital currencies) should also be developed to ensure access to a public money in the digital era, and could support the introduction of post-growth policies. Public digital money, alongside new payments systems, may also support wider efforts to reclaim the economic policy space of countries lower down the currency hierarchy by accelerating the shift towards greater use of local currency for trade, debt and lending.
