This document proposes a "Guarantee Society" approach to create a resilient Market 3.0 through open capital and financial resilience. It involves sellers accepting buyers' IOUs that are guaranteed by a pool funded by guarantee fees paid by both parties. Defaults are handled by collecting from buyers or paying sellers from the pool managed by a service provider. The model is based on Protection & Indemnity Clubs that have mutually guaranteed risks for over 140 years, showing 21st century problems can be solved through reviving pre-existing solutions rather than only 20th century approaches.

1. The Community is the Currency
A Guarantee Society Approach
Chris Cook
Bristol 20th June 2013

2. “21st
Century problems cannot be solved
with 20th
Century solutions”

3. Market Paradigms
Market 1.0 – decentralised, disconnected, physical
Market 2.0 – centralised, connected, intermediated
- Debt (Banks) and Equity (Joint Stock Company)
- October 2008 – the Market 2.0 paradigm broke
How do we achieve a resilient Market 3.0 ?

4. Introduction - Resilience
Resilience - the enduring power of a body or bodies for
transformation, renewal and recovery through the flux of
interactions and flow of events
Resource Resilience – Natural Grid
Financial Resilience – Open Capital

5. Financial Resilience – Open Capital
Prepay – credit returnable in payment for value
Nondominium
- People-based (P2P) Credit – Guarantee Society
- Asset-based Credit – Capital Partnership

6. Guarantee Society - Seller accepts Buyer's IOU
Seller Buyer
IOU
Value

7. IOU is guaranteed by Sellers & Buyers mutually
Seller Buyer
IOU
Value
Pool
GuaranteeGuarantee

8. Seller & Buyer pay guarantee charge into Pool held
by Custodian
Seller Buyer
IOU
Value
Pool GuaranteeGuarantee
Fee Fee

9. 1/ Buyer settles credit in £ or '£'s worth' eg energy-
based or land-based currency
Seller Buyer
Value
Pool GuaranteeGuarantee
Fee Fee

10. 2/System identifies a chain of IOUs A<B<C<D<E<A
and 'nets' them out
Seller A Buyer B
Pool
GuaranteeGuarantee
Fee Fee
Buyer C
Buyer D
Buyer E
IOU
IOU
IOU IOU
IOU

11. 3/ Buyer defaults: system pays sellers and collects
from buyer if possible
Seller A Buyer
Default
Pool
Collects
Pays
Seller B
Default
Pays

12. Service provider sets guarantee limits, handles
defaults & manages system
Seller Buyer
IOU
Value
Pool GuaranteeGuarantee
Fee Fee
Manager
FeeService

13. Clearing Union
Guarantee Society is the social contract within which
Sellers accept Buyers' credit and settle balances
Sellers and Buyers pay a guarantee charge and share
costs of operation and defaults
Manager allocates guarantee limits, manages platform,
ensures transparency, handles defaults

14. Clearing Union
Producer Consumer
Pool GuaranteeGuarantee
Fee Fee
Manager
FeeService

15. It'll Never Work
For 140 years, Protection & Indemnity (P&I) Clubs have
mutually guaranteed risks Lloyds won't cover
For 125 years P& I Clubs have been managed by
Thomas Miller

16. Market 3.0 – Banking......but not Banks
- networked, decentralised and dis-intermediated market
presence = network presence
- banking as value-adding service......not banks as
value-extracting middlemen
- they'll never do it? They already are – because risk is
with end users & so capital required is minimal

17. 21st
Century problems cannot be solved with 20th
century solutions.........

18. …....21st
century solutions pre-date modern finance