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Social contracts clearing union

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Social contracts clearing union

  1. 1. The Community is the CurrencyA Guarantee Society ApproachChris CookBristol 20th June 2013
  2. 2. “21stCentury problems cannot be solvedwith 20thCentury solutions”
  3. 3. Market ParadigmsMarket 1.0 – decentralised, disconnected, physicalMarket 2.0 – centralised, connected, intermediated- Debt (Banks) and Equity (Joint Stock Company)- October 2008 – the Market 2.0 paradigm brokeHow do we achieve a resilient Market 3.0 ?
  4. 4. Introduction - ResilienceResilience - the enduring power of a body or bodies fortransformation, renewal and recovery through the flux ofinteractions and flow of eventsResource Resilience – Natural GridFinancial Resilience – Open Capital
  5. 5. Financial Resilience – Open CapitalPrepay – credit returnable in payment for valueNondominium- People-based (P2P) Credit – Guarantee Society- Asset-based Credit – Capital Partnership
  6. 6. Guarantee Society - Seller accepts Buyers IOUSeller BuyerIOUValue
  7. 7. IOU is guaranteed by Sellers & Buyers mutuallySeller BuyerIOUValuePoolGuaranteeGuarantee
  8. 8. Seller & Buyer pay guarantee charge into Pool heldby CustodianSeller BuyerIOUValuePool GuaranteeGuaranteeFee Fee
  9. 9. 1/ Buyer settles credit in £ or £s worth eg energy-based or land-based currencySeller BuyerValuePool GuaranteeGuaranteeFee Fee
  10. 10. 2/System identifies a chain of IOUs A<B<C<D<E<Aand nets them outSeller A Buyer BPoolGuaranteeGuaranteeFee FeeBuyer CBuyer DBuyer EIOUIOUIOU IOUIOU
  11. 11. 3/ Buyer defaults: system pays sellers and collectsfrom buyer if possibleSeller A BuyerDefaultPoolCollectsPaysSeller BDefaultPays
  12. 12. Service provider sets guarantee limits, handlesdefaults & manages systemSeller BuyerIOUValuePool GuaranteeGuaranteeFee FeeManagerFeeService
  13. 13. Clearing UnionGuarantee Society is the social contract within whichSellers accept Buyers credit and settle balancesSellers and Buyers pay a guarantee charge and sharecosts of operation and defaultsManager allocates guarantee limits, manages platform,ensures transparency, handles defaults
  14. 14. Clearing UnionProducer ConsumerPool GuaranteeGuaranteeFee FeeManagerFeeService
  15. 15. Itll Never WorkFor 140 years, Protection & Indemnity (P&I) Clubs havemutually guaranteed risks Lloyds wont coverFor 125 years P& I Clubs have been managed byThomas Miller
  16. 16. Market 3.0 – Banking......but not Banks- networked, decentralised and dis-intermediated marketpresence = network presence- banking as value-adding service......not banks asvalue-extracting middlemen- theyll never do it? They already are – because risk iswith end users & so capital required is minimal
  17. 17. 21stCentury problems cannot be solved with 20thcentury solutions.........
  18. 18. …....21stcentury solutions pre-date modern finance

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