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Step 1: The Department of the Treasury issue Notes (like Bank of England Notes; can also be in electronic deposit format exactly as Bank of England electronic deposits) to pay off the National debt. Department of Treasury ceases the practise of selling bonds ("UK Gilts") to the Bank of England in exchange for them issuing more Notes and/or electronic deposits. Going forward, all money the UK government requires will be created by its own Department of the Treasury, debt free. A suitable mechanism of restraint on the issuance of new money by the Treasury should be agreed upon and put in place, to credibly anchor future inflation expectations for citizens and international investors while at the same time enabling the economy to expand and to absorb population increases.
Step 2: Increase the reserve ratio private banks are required to maintain from 10% to 100%, thus ending the Fractional Reserve Banking system that enables private banks to create money from thin air by issuing loans.
These two relatively simple steps, which government has the power to enact, would extinguish the national debt, without inflation or deflation, and end the unjust practice of private banks creating money as loans (i.e.: Fractional Reserve Banking). Paying off the national debt would wipe out the £billions of interest payments made by the UK Government to private banks annually, thereby bringing the budget deficit back into balance.
This plan would stabilize the economy and end the boom-bust economic cycles caused by the Fractional Reserve Banking system. It would additionally be impossible for any bank in the UK to fail in future as a result of a run on its deposits.