It is about time that the Bank Charter Act of 1844 is brought up to date.
This is the suggestion of a letter published by the Financial Times, which claimed the act should be updated in a bid to adapt it to the electronic age.
It was explained that while the act was first introduced to prevent banks from creating new money, lenders of today can sidestep this ruling - which originally related to the printing of physical notes - by issuing money electronically as credit.
While just three per cent of money supply is currently issued as coins and notes, there is a remaining 97 per cent of money in circulation that brings in a sizeable profit - which, it is argued, should by rights go to the state rather than to the private banking sector.
As a result of such an approach, the government's austerity programme might reduce in severity, it was claimed.
By Asim Shah