My thinking has evolved, but the question that started this journey has not gone away
By Iain Parker
I began researching monetary, banking and credit systems many years before the Global Financial Crisis, and this blog became a repository for that journey.
I have deliberately left it online.
There is a considerable archive here of newspaper articles, correspondence, parliamentary submissions, institutional reports, historical material and primary-source evidence concerning money creation, banking, public credit, government borrowing and New Zealand's economic history. Some of that evidence has aged remarkably well.
My understanding, however, has continued to develop.
Anyone discovering this blog today should therefore understand that I do not necessarily endorse every explanation, mechanism or conclusion exactly as I expressed it ten, fifteen or twenty years ago.
That is not something I intend to hide by rewriting history. Quite the opposite. Research should be a process of following evidence wherever it leads, correcting mistakes when better evidence becomes available, and retaining what survives scrutiny.
WHAT I GOT RIGHT
One of the central arguments running throughout this archive was that the conventional story of banks simply collecting people's savings and lending those savings to somebody else was seriously incomplete.
That argument has subsequently received remarkably explicit confirmation from the institutions themselves.
The Bank of England explained in its landmark 2014 paper Money creation in the modern economy that commercial-bank lending creates deposits and specifically rejected the conventional textbook description in which banks simply lend existing deposits or mechanically multiply central-bank reserves.
The Reserve Bank of New Zealand went even further for the New Zealand context in its 2023 Bulletin article Money creation in New Zealand. It stated that bank deposits make up about 98 per cent of New Zealand's broad money and explained how broad money is created through interactions between banks and their customers.
So the fundamental question that drove much of this blog remains very much alive:
If society grants private institutions the extraordinary privilege of creating most of the purchasing media we use, where should that credit be directed, under what conditions, who should benefit from it, and what should the sovereign state itself be capable of financing directly?
I now believe those questions are more important than ever.
WHAT I WOULD EXPLAIN DIFFERENTLY TODAY
There are, however, several important areas where my earlier explanations were too crude or simply wrong.
First, fractional-reserve banking.
Some early material on this blog uses the traditional "fractional reserve" or "money multiplier" explanation, in which banks receive deposits, retain a fraction as reserves and lend multiples of those reserves.
I would not explain modern New Zealand banking that way today.
Banks create deposit money when they lend. Their lending is constrained by capital requirements, liquidity requirements, funding costs, profitability, credit risk, regulation, borrower demand and ultimately the monetary and financial-stability framework, rather than by mechanically multiplying a pre-existing quantity of reserves.
Ironically, later official central-bank publications have made the case against the old textbook explanation considerably better than monetary reformers once could.
Second, interest and the supposed mathematical impossibility of repayment.
Some of my earlier articles argued that because banks create the principal of loans but not an additional amount representing all future interest, aggregate debt must therefore be mathematically impossible to repay.
I no longer regard that as a sound explanation.
Money is a circulating stock while interest is a flow. Money received as interest does not necessarily disappear from the economy, it can return through bank expenditure, wages, dividends, purchases and other transactions. The stock of money and credit is also continually changing.
There remains an extremely important question about the cumulative economic burden of interest-bearing debt, distribution of financial claims, leverage, asset-price inflation and an economy's dependence upon continuing credit creation, but the simple "principal exists, interest doesn't, therefore repayment is mathematically impossible" argument does not adequately describe the system.
I withdraw that particular argument.
Third, New Zealand Debt Management and the influence of the international financial architecture.
Some of my older writing described the former New Zealand Debt Management Office, now New Zealand Debt Management, in ways that could be read as suggesting that it was itself privately owned.
That requires clarification, but not, in my view, abandonment of the deeper argument I was trying to make.
NZDM is institutionally part of the New Zealand Treasury. It is not legally a privately owned organisation. It issues and manages New Zealand Government Securities and Crown financial assets and liabilities on behalf of the sovereign New Zealand Government.
Where my thinking has evolved is in distinguishing legal ownership from institutional influence, operating doctrine and effective economic power.
My concern today is therefore not that NZDM is secretly owned by foreign banks. It isn't.
My concern is that New Zealand has embedded its sovereign financing arrangements within an international financial architecture whose conventions, institutional relationships and accepted economic doctrines heavily privilege government securities markets, private financial intermediaries, central-bank orthodoxy and externally developed standards of public financial management.
That distinction has become increasingly important to my research.
Treasury occupies an extraordinarily influential position in New Zealand government. It is not merely an accountant recording decisions made elsewhere. It advises governments on fiscal strategy, public finance, economic policy and the institutional framework within which governments are repeatedly told their choices must be made. NZDM sits inside that institution and operates at the interface between the sovereign Crown and domestic and international capital markets.
The question I now ask is therefore considerably more interesting than, "Who legally owns NZDM?"
Whose economic doctrine governs the institution, through what international networks was that doctrine developed and reinforced, whose interests does the resulting architecture ultimately serve, and how much genuine monetary sovereignty remains available to Parliament when virtually the entire political establishment accepts those institutional assumptions as immutable?
The distinction was dramatically illuminated during COVID.
New Zealand was confronted with an extraordinary emergency requiring enormous government expenditure. Direct monetary financing was considered. Treasury documentation acknowledged that there was no fundamental legal impediment preventing monetary financing from being considered, yet New Zealand ultimately travelled down the enormous bond issuance and quantitative easing route instead.
That experience changed my understanding considerably.
It demonstrated that the argument is not simply about whether New Zealand technically possesses sovereign monetary capacity. The more important question is whether our institutional architecture permits elected governments to recognise and prudently exercise that capacity, or whether policy choices have become bounded by doctrines developed within an international central banking and financial-market system.
This is why I now use stronger language about institutional capture.
I regard the degree to which New Zealand's sovereign financing choices have become subordinated to this internationally developed financial orthodoxy as sufficiently serious to raise what I call the foreign-agent problem.
I use that expression deliberately as a political and institutional critique, not as a claim that NZDM or Treasury is legally foreign-owned.
An institution can remain wholly owned by the New Zealand state while nevertheless becoming intellectually and operationally dependent upon doctrines, conventions and market structures developed largely outside New Zealand. If those doctrines become so entrenched that alternatives demonstrably available to a sovereign Parliament are effectively excluded from serious consideration, then legal ownership tells us surprisingly little about where effective economic power resides.
And if Parliament itself ceases seriously questioning those constraints, the problem moves beyond Treasury.
Parliament risks becoming the final transmission mechanism.
That is the proposition I would investigate today far more carefully than I did in my earlier writing: not secret foreign ownership, but institutional capture, imported economic doctrine, market dependency and the progressive narrowing of sovereign democratic choice.
That is a much harder and, I believe, much more important question.
WHERE MY THINKING HAS MOVED MOST
Perhaps the biggest evolution concerns the solution.
Earlier material on this blog was strongly influenced by Social Credit, Positive Money, sovereign-money proposals and the idea of requiring something approaching 100 per cent reserves behind transactional bank money.
Those ideas played an important role in my education, but they are no longer an adequate description of the reform I advocate.
I do not now believe it is necessary to abolish private bank credit creation.
I believe we have confused two fundamentally different economic functions.
There is a legitimate role for private enterprise, private investment and private banking in financing competitive commercial activity where investors and lenders accept the risks and rewards.
But beneath that competitive economy lies a foundational layer upon which everybody depends, land, energy, water, essential infrastructure, strategic transport, housing foundations and other natural monopolies and national necessities.
Why should a sovereign nation necessarily require privately created, interest-bearing financial claims to mobilise its own labour, skills, technology and physical resources to construct those foundations?
That is where my present work on Sovereign Foundational Credit begins.
The ultimate constraint upon sovereign credit is not an arbitrary financial number. Nor does possessing monetary sovereignty mean that governments can create unlimited purchasing power without consequences.
The real discipline is productive capacity.
Labour, materials, machinery, energy, technology, land, environmental limits, imports, foreign-exchange requirements and the ability of the economy to produce additional goods and services are the constraints that matter.
Create purchasing power beyond those limits and inflation, shortages, currency pressure and resource misallocation can follow.
But where idle or expandable productive capacity exists, refusing to mobilise it merely because the sovereign government claims it cannot "find the money" deserves much closer examination.
The experience of the COVID period reinforced this distinction enormously. Governments and central banks demonstrated very quickly that enormous quantities of financial capacity could be mobilised when circumstances demanded it.
The important debate is therefore not simply whether money can be created, but how, by whom, for what purpose, through which institutional channel, against what real-resource constraints, and who ultimately receives the benefit.
SO PLEASE READ THIS BLOG AS AN ARCHIVE
I have chosen not to sanitise this site by deleting everything I would word differently today.
It documents an intellectual journey.
Some claims here I still stand firmly behind. Some have subsequently been supported by remarkably candid primary-source material from central banks and governments. Some I would now qualify. A few I would withdraw completely.
Readers are therefore encouraged to distinguish between the primary-source evidence preserved throughout this archive and my interpretation of that evidence at the particular time I wrote about it.
Where the evidence contradicts my old interpretation, take the evidence.
That is what I have done.
My current work continues through Sovereign Credit NZ, where I am developing the concept of Sovereign Foundational Credit and the proposed Sovereign Foundational Credit and New Zealand Wealth Restoration Act.
The destination has evolved considerably since the earliest articles on this site.
The question that began the journey has not:
Who should possess the authority to create the credit by which a sovereign nation's people mobilise their own labour and resources, for whose benefit should that extraordinary power operate, and what real-world limits should govern it?
After all these years of research, I believe that is still one of the most important economic questions New Zealand has barely begun to ask.
Iain Parker
Founder, Sovereign Credit NZ
September 2026
THE SOVEREIGN FOUNDATIONAL CREDIT AND NEW ZEALAND WEALTH RESTORATION ACT 2026
FULL EXPOSURE DRAFT — NOW OPEN FOR PUBLIC SCRUTINY
Well, here it is.
After years of arguing that New Zealand should at least investigate its sovereign right to finance its own foundational productive capacity, I have decided it is time to stop leaving the argument in the abstract and put an actual legislative framework on the table.
Attached to this post is the Full Exposure Draft of the Sovereign Foundational Credit and New Zealand Wealth Restoration Act 2026.
For those who have been following this work for a while, one thing needs explaining first.
Until now, I had been developing what I called the New Zealand Economic Stabilisation and Public Wealth Restoration Bill.
It has not disappeared.
It has evolved.
As the legislation was developed clause by clause, tested against the obvious objections and expanded into something closer to a complete statutory architecture, it became increasingly clear that the old title no longer told people what the proposal was really about.
"Economic Stabilisation" remains an important objective, but it describes an outcome more than it identifies the core reform.
That core reform is Sovereign Foundational Credit.
The completed Exposure Draft now sets out what Sovereign Foundational Credit is, what it may and may not finance, who may authorise it, what real-resource and stability tests must be met, how the resulting financing advantage is to be retained for public benefit, how qualifying existing interest-bearing liabilities may be replaced as they mature, and how the whole system is to be subjected to transparency, independent oversight and democratic safeguards.
So rather than hide the central proposition behind a more general title, I decided to put it right on the tin.
The New Zealand Economic Stabilisation and Public Wealth Restoration Bill has therefore become the Sovereign Foundational Credit and New Zealand Wealth Restoration Act 2026.
The public-wealth-restoration objective remains. The economic-stability safeguards remain. In fact, they are considerably more developed than they were before.
What has changed is that the title now tells people exactly what I am asking them to examine.
The proposal is not "print money and hope for the best".
It is not a claim that financial entries can magically create workers, concrete, steel, electricity, machinery, technology, imported goods or productive capacity that do not exist.
The whole point is almost the opposite.
The proposed Act establishes a statutory framework through which New Zealand could exercise Sovereign Foundational Credit for qualifying foundational purposes, but only subject to real productive capacity, price stability, financial stability, monetary stability, external-balance constraints, transparency and independent oversight.
At the heart of it sits a very simple question:
Why should a sovereign nation automatically rent the financial representation of its own productive capacity from somebody else when it possesses the sovereign authority to create and govern its own currency and credit system?
And if we are going to exercise that capacity, how do we build machinery around it that prevents abuse, inflationary recklessness, political capture and private extraction?
That second question is where much of this draft earns its keep.
The Act establishes a Sovereign Foundational Credit Authority as the statutory gatekeeper rather than handing politicians an unlimited monetary chequebook.
It defines what qualifies as a foundational purpose, and just as importantly, what does not.
It establishes a Public Utility Not-for-Profit Trust Model, designed so that the financing advantage created through Sovereign Foundational Credit is transmitted through to the public in lower foundational costs rather than being quietly harvested as another private profit stream.
It also provides for the lawful, maturity-led replacement of qualifying interest-bearing public liabilities.
That distinction matters.
I am not proposing that New Zealand simply refuses to honour lawful debts or tears up contracts. The question is why, when qualifying liabilities mature, they should automatically have to be replaced with another generation of interest-bearing debt if an appropriate sovereign financing alternative exists.
The draft also separates Debt Balance and Monetary Balance accounting.
That matters because reducing interest-bearing debt does not make the monetary consequences of sovereign credit issuance disappear. Both sides of the ledger have to be watched.
One of the great weaknesses in monetary argument is the habit of choosing one side of the equation and pretending the other side is somebody else's problem.
The Act therefore creates a Comprehensive Monetary Stability Dashboard rather than relying on one narrow consumer-price measure while ignoring asset prices, credit growth, land values, productive capacity, labour and material constraints, imports, foreign exchange, external balances and distributional effects.
This leads to one of the most important distinctions in the whole proposal.
A shortage of New Zealand-dollar financial units is not the same thing as a shortage of real resources.
New Zealand can create New Zealand-dollar credit. It cannot create another country's currency by passing an Act of Parliament.
It cannot type an excavator into existence.
It cannot create a qualified engineer with an accounting entry.
It cannot manufacture imported technology just because Wellington would find that convenient.
And it cannot safely command more labour, materials, energy and productive capacity than actually exist without consequences.
That is why real productive capacity sits at the centre of the proposed system.
The Act also includes safeguards against speculative use, political misuse, private extraction and the conversion of Sovereign Foundational Credit into some general cheap-credit free-for-all.
It preserves existing lawful contractual rights. It requires New Zealand's binding international obligations to be considered. And it creates transparency, audit, reporting and review requirements intended to make the exercise of sovereign credit authority visible rather than burying it somewhere deep inside the machinery of government.
The Full Exposure Draft contains 20 Parts, 164 sections and six Schedules.
So this is no longer merely an argument that New Zealand could finance some things differently.
It is an attempt to show how such a system might actually be built.
Now comes the useful part
This is deliberately called a Full Exposure Draft.
I am not pretending that I, a small group of monetary reformers, and an AI research and production assistant have somehow transformed ourselves into the Parliamentary Counsel Office overnight.
Nor am I suggesting that because the document now runs to 164 sections, every clause must therefore be correct.
Quite the opposite.
Now it needs to be attacked.
The next stage is forensic review.
Does it work within New Zealand's existing statutory framework? Does a provision clash with another Act? Does it survive our trade and investment obligations? Are the institutional safeguards strong enough? Could a future government abuse it? Could private interests capture it? Could the Authority itself be captured? Are the definitions tight enough? Does the monetary accounting work? Are the inflation, productive-capacity and external-balance constraints adequate? Does the maturity-led debt-replacement framework sufficiently protect existing legal rights?
And have I accidentally left a loophole big enough to drive a privately financed motorway through?
That is why I am publishing the whole bloody thing.
If you think a clause cannot work, tell me which clause and why.
If you think it conflicts with New Zealand law, identify the law.
If you believe an international agreement prevents it, identify the agreement and provision.
If you think the monetary logic fails, show me where.
If you believe a safeguard can be circumvented, demonstrate how.
And if somebody can demonstrate that something is wrong, then it should be changed.
That is not weakness. That is what an Exposure Draft is for.
The objective is not to defend every sentence because I happen to have written it. The objective is to develop a legislative architecture strong enough to survive serious scrutiny.
Beneath all the sections, schedules, definitions and safeguards sits one question I think New Zealand has avoided for far too long:
Should New Zealand use its own sovereign credit capacity, prudently constrained by its real productive capacity, to finance the foundations upon which its economy and society depend?
If the answer is no, then tell me why.
But after decades in which governments have treated borrowing interest-bearing credit as though it were some immutable law of nature, "that's just how government finance works" is no longer much of an answer.
The burden should not rest entirely on those of us asking why sovereign foundational credit deserves to be investigated.
Those defending the existing financing architecture should also be willing to explain why an alternative should not even be examined.
So here it is.
Not the final word.
Not Parliamentary Counsel Office legislation.
Not carved into tablets of stone.
A serious attempt to turn an economic proposition into a transparent, constrained and testable legislative framework.
The Full Exposure Draft is attached below.
Read it. Attack it. Improve it. Question everything. Follow the evidence.
To read the bill in full:
https://www.facebook.com/groups/sovereigncredit.nz/posts/1551332205951887