Rethinking the Role of Banks in Economics Education
Jump straight to how to run the campaign at your university: Campaign Pack: Rethinking the Role of Banks
What is the campaign?
Banks play a major role in our economy, yet we know that in economics courses around the world the teaching around the role of banks in the economy, and in the creation of money, often isn’t based on empirical evidence. Neither does teaching draw on a plurality of perspectives to encourage critical assessment of banks’ functions.
Rethinking the Role of Banks in Economics Education is a student-led campaign to bring positive change to economics education. In this campaign, we are challenging the current teaching of the role of banks in our economics and business courses, which leaves us without an understanding of how banks function in the real-world.
Economics textbooks across the world, some of them first published in the 1960s, continue to teach students a model of the monetary system in which commercial banks act as intermediaries, that only move existing money around the system, like lubricant in a machine. Many economics courses rely on the models in these textbooks, without recognising the empirical evidence that undermines them, nor providing alternatives perspectives that more accurately describe the functioning of banks in the monetary system. This gives an unbalanced view of the way the monetary system functions and of the role of banks in the economy.
Research from the Bank of England, the Bundesbank and countless other central banks and academics demonstrates that banks create money when they extend loans. Yet, this information is often disregarded in the name of creating ‘useful simplifications’ for students to understand. Many students as they go into the world of work – some to become policy-makers – will rely on the education they received in their economics courses. Why teach students models of the financial sector and its role in the creation of money that completely mislead learners?
In autumn 2019, Rethinkers across the international network called on universities to stop teaching us out-dated models and start teaching us how banks actually work. How can we expect economists to analyse the economy when they don’t know how banks run?
Rethinking Economics International also published an open letter in November 2019, signed by over 70 economists, civil society organisations and influential thinkers, as well as Rethinking Economics groups, who support the calls for a more balanced and real-world-based education for economists.
Join Rethinking Economics and campaign to reform this key element of economics education and to ensure it is grounded in the real-world.
Review your economics courses for their teaching on the role of banks.
If you are interested in the campaign and want more information or help running it please email email@example.com.
For more history of the campaign coverage see: Pluralism in Economics Maastricht (PINE) – PINE were the first group to take action and raise this issue with their university; Netherlands; German Politics and Business editorial, Makroskop, Danish media; English Observant, Diplomat, and Alliance for Just Money, Positive Money; Malta – Times of Malta & Newsbook