Downloaded 22 times
Uploaded byNICVA Centre for Economic Empowerment
Money as a Social Technology - Leander Bindewald (nef)
The document discusses the New Economics Foundation's perspective on the shift from traditional bank debt-based money to community currencies as a social technology. It highlights the Community Currencies in Action project aimed at empowering communities across Northwest Europe through knowledge sharing and implementing community currencies to achieve better social, economic, and environmental outcomes. Additionally, it explores the role of banks in money creation, the challenges of bank-debt money, and various forms of community currencies to address these issues.
More Related Content
Similar to Money as a Social Technology - Leander Bindewald (nef)
More from NICVA Centre for Economic Empowerment
Money as a Social Technology - Leander Bindewald (nef)
- 1. nef (the neweconomics foundation) From Bank Debt to Mutual Credit or Money as a social technology Leander Bindewald nef (the new economics foundation) NICVA, Belfast, 13st June 2014
- 2. nef (the neweconomics foundation) 2 This presentation has been produced by the New Economics Foundation as part of the Community Currencies in Action (CCIA) collaboration project. CCIA is a transnational partnership working to develop and deliver community currency demonstrations in several member states across the North West of Europe. CCIA will lead the way in sharing knowledge and best practice to enable communities throughout Europe to grow stronger in their ability to achieve vibrant and prosperous networks that are efficient in delivering social, economic and environmental outcomes. CCIA will design, develop and implement community currencies across NW Europe; providing a rigorously tested package of support structures to facilitate the development of CCs across NWE and promote CCs as a credible (policy) vehicle for achieving positive outcomes. CCIA is part funded through the INTERREG IVB North West Europe (NWE) Programme, which is a financial instrument of the European Union’s Cohesion Policy - Investing in Opportunities. Find out more about CCIA on our website: www.communitycurrenciesinaction.eu
- 3. nef (the neweconomics foundation) From Bank Debt to Mutual Credit 1. What is money? 2. What is the role of Banks 3. Where does money come from 4. Problems with bank-debt money 5. What are Community Currencies? 6. What are the different concepts 7. What are the advantages 8. Typical examples
- 4. nef (the neweconomics foundation) 1. What is money?
- 5. nef (the neweconomics foundation) 2. What do banks do? Where did this money come from?
- 6. nef (the neweconomics foundation) 2. What do banks do? This is where money is created!
- 7. nef (the neweconomics foundation) Loan Agreement I agree to repay the sum of £ 10,000 with interest at 10% Signed: A. Customer Customer’s Bank Statement Personal loan 10,000 Balance 10,000 DR CR 3. Bank credit is money
- 8. nef (the neweconomics foundation) Simplified bank balance sheet Assets Liabilities Central bank reserves Bonds & other liquid assets Derivatives Customer loans Government bonds Equity capital Bonds in issue Derivatives Interbank borrowing Deposits Interbank lending This is money …and this is money Cash
- 9. nef (the neweconomics foundation) Government bonds The act of creating new money Assets Liabilities Bonds & other liquid assets Derivatives Customer loans Equity capital Bonds in issue Derivatives Interbank borrowing Deposits Interbank lending STEP 1a: You sign a loan agreement with the bank. The bank now has a new asset. STEP 1b: The bank credits your account, creating a new deposit, ie new money. Central bank reserves Cash
- 10. nef (the neweconomics foundation) The act of creating new money Assets Liabilities Bonds & other liquid assets Derivatives Customer loans Equity capital Bonds in issue Derivatives Interbank borrowing Deposits Interbank lending STEP 2a: You spend the money (on whatever you borrowed it for) STEP 2b: When you transfer your deposit, your bank transfers CB reserves to settle your payment with the other bank. Central bank reserves Cash Government bonds
- 11. nef (the neweconomics foundation) The act of creating new money Assets Liabilities Bonds & other liquid assets Derivatives Customer loans Equity capital Bonds in issue Derivatives Interbank borrowing Deposits Interbank lending STEP 3b: by borrowing on the interbank market STEP 3a: At the end of the day the bank replenishes its reserves Central bank reserves Cash Government bonds
- 12. nef (the neweconomics foundation) Inter-Bank Clearing
- 13. nef (the neweconomics foundation) Bank failure: solvency Assets Liabilities Bonds & other liquid assets Derivatives Customer loans Equity capital Bonds in issue Derivatives Interbank borrowing Deposits Interbank lending If a bank makes too many losses on its assets (because the debtor defaults)… It will wipe out its own capital, and become bankrupt. Central bank reserves Cash Government bonds
- 14. nef (the neweconomics foundation) Bank failure: liquidity Assets Liabilities Bonds & other liquid assets Derivatives Customer loans Equity capital Bonds in issue Derivatives Interbank borrowing Deposits Interbank lending If customers try to cash in their claims too quickly – ‘a run on the bank’ It will run out of reserves and will be broke Central bank reserves Cash Government bonds
- 15. nef (the neweconomics foundation) Where does money come from? “When banks make loans they create additional deposits for those that have borrowed” Bank of England (2007) “In the Eurosystem, money is primarily created through the extension of bank credit… The commercial banks can create money themselves.” Bundesbank (2009) “When banks extend loans to their customers, they create money by crediting their customers’ accounts.” Mervyn King (2012)
- 16. nef (the neweconomics foundation) Bank debt money
- 17. nef (the neweconomics foundation) 4. Problems with Bank-Debt money
- 18. nef (the neweconomics foundation) Monopoly Bank Money • One size does not fit all economic regions • Interest and exchange rates favour the strongest • Vital import/export balancing and competition effects are lost
- 19. nef (the neweconomics foundation) Professor, why did nobody notice? “At every stage, someone was relying on someone else; and everyone thought they were doing the right thing” Professor of Economics Luis Garicano, London School of Economics in response to the Queen, November 2008
- 20. nef (the neweconomics foundation) Inequality through embedded interest www.monneta.org
- 21. nef (the neweconomics foundation) www.egs.mmu.ac.uk
- 22. nef (the neweconomics foundation) www.PositiveMoney.org Monetary Reform
- 23. nef (the neweconomics foundation) Who can create money? Banks created as interest- bearing debt by private banks “The Ecology of Money” by Richard Douthwaite People based on “resources” and mutual agreement Government spent into circulation by state and collected as tax
- 24. nef (the neweconomics foundation) 5. What are Complementary Currencies?
- 25. nef (the neweconomics foundation)
- 26. nef (the neweconomics foundation) “An agreement within a community to use something as a medium of exchange” Bernard Lietaer “Currency is any unit system, that facilitates collaboration in a community” Currency = Social Technology
- 27. nef (the neweconomics foundation) Local exchange – backed by fiat currencies Social exchange – time credits/hours Economic exchange – Business Barter, Loyalty points Environmental exchange – Reward Points, Carbon quotas Community Currencies concepts Learning/Awareness, “participate and feel empowered”
- 28. nef (the neweconomics foundation) Examples: Local Currencies
- 29. nef (the neweconomics foundation) Local Solution: Plugging the leaks from: www.pluggingtheleaks.org
- 30. nef (the neweconomics foundation) Social Inclusion
- 31. nef (the neweconomics foundation) SME Credit Currencies
- 32. nef (the neweconomics foundation) Ecological Reward Points www.e-portemonnee.be
- 33. nef (the neweconomics foundation) What is Bitcoin? – An Analogy 1922: “I heard it on the Radio”
- 34. nef (the neweconomics foundation) 2012: “I paid for it with Bitcoin” What does Bitcoin facilitate?
- 35. nef (the neweconomics foundation) CCIA: Implementation Framework Overall aims Project Plan Stakeholders Project specific objectives Partners Endusers Currency Model www.CCIA.eu
- 36. nef (the neweconomics foundation) www.CCIA.eu/ToC-Toolkit
- 37. nef (the neweconomics foundation) Want to know more? http://www.neweconomics.org/issues/entr y/community-currencies www.community-currency.info
- 38. nef (the neweconomics foundation) “Money is not metal; it is trust inscribed” Niall Ferguson Money - a Social Relationship