Which bank could give Australians a better bang for their buck? The RBA

The economic gains from taking competitive neutrality seriously in this way are very large. A 2016 Bank of England paper that looked at central banks facilitating payments with their own digital currency estimated gains of 3% of GDP. That exceeds the PC's estimate of the gains from national competition policy throughout the 1990s in electricity, gas, urban water, telecommunications, urban transport, ports and rail freight.

Much of this gain arises from government money creation in lending to householders (under my model) or in issuing digital currency (under the Bank of England model). Currently the people's bank – the RBA – creates about 3% of the money stock in printing banknotes with the rest created by commercial banks as they make loans (nice work if you can get it!). These new arrangements would see governments creating around half the money we use which would generate tens of billions in revenue allowing tax cuts or increased expenditure elsewhere.

More promisingly still, by recommitting to a more sophisticated, less tendentious understanding of the principle of competitive neutrality we could take a first big step beyond the simplistic slogans – markets good/governments bad – that have dogged economic reform and made it such a disappointment looking back.

Where market failure abounds – and that's nowhere more true than finance – problems should be tackled on their merits with public and private sectors each playing to their respective strengths.