Legitimising and Delegitimising the Monetary System : Competing Portrayals of Fractional Reserve Banking in Knowledge Discourse

Abstract: This is a study of how knowledge producing actors, like professors of economics, ecological economics and investigators at public institutions, portray the monetary system in general and fractional reserve banking specifically. The methodology of Political Discourse Analysis, with focus on argumentation and legitimisation, is used to identify and compare how different actors portray the monetary system. The outcome shows that there exist competing knowledge discourses that are diametrically different in how they define keywords and describe the relation between the monetary system, societal power relations and environmental impact. Some important concepts under academic debate include the origin of money, which actor (the state or commercial banks) controls the money supply and seigniorage (money issuer’s revenue), if private banks really are intermediaries and multiply central bank money, and if interest-bearing money is a cause of socioecological unsustainability. By critically analysing the moral norms within knowledge discourses that otherwise might be naturalised as portraying ‘facts’ or ‘truth’, this thesis helps identify needs for further research – especially regarding how the financial system can be better adapted for socioecological sustainability.