Revisiting Modern Economic Imbalances and a Sustainable Future: Reforming the Monetary System and Currency Issuance Framework

The monetary system has played a pivotal role in overcoming the inefficiencies of barter trade and streamlining economic activities. However, the current framework for currency issuance has significant imbalances, particularly the fact that banks hold the power to issue money. This dynamic has become a destabilizing factor in the economy, necessitating reforms for sustainable financial management. This article explores the role of the monetary system, challenges in the current currency issuance structure, and actionable proposals for sustainable economic operations.

The Role and Value of the Monetary System

The core value of the monetary system lies in its ability to overcome the instability of barter trade and enhance economic efficiency.

Key Functions of Money:

Store of Value: Money provides a reliable means of storing the value of goods and services.

Medium of Exchange: 

It facilitates transactions between goods and services with differing values, enabling smooth economic circulation.

Unit of Account: 

Money clarifies pricing, enhancing transparency in economic activities.

For example, a farmer can sell their produce and use the money earned to purchase machinery—an essential mechanism that supports societal development.

Current Imbalances in the Currency Issuance Framework

1. Banks as Currency Issuers

In the current system, banks dominate currency issuance, exacerbating economic imbalances.

Profit-Driven Issuance: 

Banks prioritize profit maximization, which may not align with public interest.

Skewed Toward Financial Capitalism: 

Currency issuance often flows into speculative markets or short-term profit-driven sectors, diluting its impact on the real economy.

2. Lack of Targeted Use for Initial Currency Supply

The absence of clear restrictions on how newly issued currency is initially allocated contributes to economic distortion.

Insufficient investment in essential industries or infrastructure leads to increased economic instability.

A Path to Reform: National Oversight of Currency Management

1. The Need for Government-Controlled Currency Issuance

For a sustainable economy, governments must take responsibility for currency issuance and establish systems focused on public benefit:

Direct Funding from Citizens and Enterprises:

 Implement a framework where government bonds are issued directly to citizens and businesses, bypassing banks.

Support for Domestic Industries: 

Limit currency issuance to initiatives that bolster domestic industries, ensuring economic stability.

Prioritize Sustainable Investments: 

Direct funds toward renewable energy, primary industries, and other sustainable sectors to promote long-term growth.

2. Specific Reform Proposals

Maintain Low-Interest Rates:

 Keep government bond interest rates low to ensure fiscal sustainability.

Ensure Transparency:

 Publicize the purpose and allocation of issued currency, building trust and aligning with public interests.

The Role of Sustainable Primary Industries

Primary industries, such as agriculture, fisheries, and forestry, are critical for stabilizing economic foundations through renewable resource utilization.

Benefits of Strengthening Primary Industries:

Boosting Regional Economies:

 Developing primary industries revitalizes local economies, supporting national economic circulation.

Expanding Exports and Competitiveness:

 Japan’s high-quality agricultural and seafood products offer significant potential in international markets, earning foreign exchange and strengthening fiscal stability.

Anchoring economic operations in primary industries creates a sustainable model independent of finite resources, fostering long-term resilience.

Conclusion: A Vision for the Future Economic Framework

The modern monetary system has revolutionized economic efficiency, but its current imbalances require urgent attention.

Banks’ control over currency issuance perpetuates economic instability.

Government-led currency management and targeted issuance for domestic industrial support are essential for sustainable growth.

Additionally, strengthening primary industries as the backbone of the economy reduces dependence on foreign resources and ensures long-term economic stability.

To achieve a stable society and sustained economic growth, governments must take full responsibility for currency issuance and create a system that supports sustainable industries. This vision provides a roadmap for addressing today’s economic challenges and building a more resilient future.