Alternative Economies: Community Currencies and Trading Schemes 13 June

Transcription

1 Alternative Economies: Community Currencies and Trading Schemes 13 June 2014

2 From Bank Debt to Mutual Credit or Money as a social technology Leander Bindewald NICVA, Belfast, 13 st June 2014

3 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: 3

4 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

5 1. What is money?

6 2. What do banks do? Where did this money come from?

7 2. What do banks do? This is where money is created!

8 3. Bank credit is money Loan Agreement I agree to repay the sum of 10,000 with interest at 10% Customer s Bank Statement DR CR Personal loan 10,000 Signed: A. Customer Balance 10,000

9 Simplified bank balance sheet Assets Liabilities This is money Customer loans Deposits Interbank lending Derivatives Bonds & other liquid assets Government bonds Cash Central bank reserves and this is money Interbank borrowing Derivatives Bonds in issue Equity capital

10 The act of creating new money STEP 1a: You sign a loan agreement with the bank. The bank now has a new asset. Assets Liabilities STEP 1b: The bank credits your account, creating a new deposit, ie new money. Customer loans Deposits Interbank lending Interbank borrowing Derivatives Bonds & other liquid assets Government bonds Cash Derivatives Bonds in issue Equity capital Central bank reserves

11 The act of creating new money Assets Liabilities STEP 2a: You spend the money (on whatever you borrowed it for) Customer loans Deposits Interbank lending Derivatives Bonds & other liquid assets Government bonds Cash Central bank reserves Interbank borrowing Derivatives Bonds in issue Equity capital STEP 2b: When you transfer your deposit, your bank transfers CB reserves to settle your payment with the other bank.

12 The act of creating new money Assets Liabilities STEP 3b: by borrowing on the interbank market Customer loans Deposits Interbank lending Derivatives Bonds & other liquid assets Government bonds Cash Central bank reserves Interbank borrowing Derivatives Bonds in issue Equity capital STEP 3a: At the end of the day the bank replenishes its reserves

13 Inter-Bank Clearing

14 Bank failure: solvency If a bank makes too many losses on its assets (because the debtor defaults) Assets Liabilities Customer loans Deposits Interbank lending Derivatives Bonds & other liquid assets Government bonds Cash Central bank reserves Interbank borrowing Derivatives Bonds in issue Equity capital It will wipe out its own capital, and become bankrupt.

15 Bank failure: liquidity Assets Liabilities If customers try to cash in their claims too quickly a run on the bank Customer loans Deposits Interbank lending Interbank borrowing Derivatives Bonds & other liquid assets Government bonds Cash Central bank reserves It will run out of reserves and will be broke Derivatives Bonds in issue Equity capital

16 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)

17 Bank debt money

18 4. Problems with Bank-Debt money

19 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

20 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

21 Inequality through embedded interest

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23 Monetary Reform

24 Who can create money? Banks created as interestbearing debt by private banks People based on resources and mutual agreement Government spent into circulation by state and collected as tax The Ecology of Money by Richard Douthwaite

25 5. What are Complementary Currencies?

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27 Currency = Social Technology 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

28 Community Currencies concepts Local exchange backed by fiat currencies Social exchange time credits/hours Economic exchange Business Barter, Loyalty points Environmental exchange Reward Points, Carbon quotas Learning/Awareness, participate and feel empowered

29 Examples: Local Currencies

30 Local Solution: Plugging the leaks from:

31 Social Inclusion

32 SME Credit Currencies

33 Ecological Reward Points

34 What is Bitcoin? An Analogy 1922: I heard it on the Radio

35 What does Bitcoin facilitate? 2012: I paid for it with Bitcoin

36 CCIA: Implementation Framework Project specific objectives Overall aims Stakeholders Partners End users Project Plan Currency Model

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38 Want to know more? y/community-currencies

39 Money - a Social Relationship Money is not metal; it is trust inscribed Niall Ferguson

40 WHAT IS TIMEBANKING?

41 History of Timebanking

42 What is a Timebank? Share skills with others and be rewarded for it For every hour you give providing help to another member you receive one time credit

43 How it Works One hour = One time credit; Principle of giving and receiving - 2 way exchange; Time Broker / Co-ordinator / Organiser (can be more than 1 person); System to record;

44 Core Values Recognising People as Assets Valuing Work Differently Promoting Reciprocity Building Social Networks Respect

45 Timebanking in Northern Ireland

46 Redburn Loughview Community Forum

47 Redburn Loughview Community Forum Timebank Established in members 2,842 hours exchanged

48 Exchanges at Redburn Loughview Drill banner at front of building Moving/Lifting Organising Social Events Painting Painting / Decorating Reading Lessons Reiki Security/ House checking Sewing/ Embroidery Shopping Simple DIY Timebroker Services Typing/word processing Wildlife / Nature Woodwork power wash front garden remove rubbish from garden Training programmes Visiting Window cleaning Babysitting Beauty treatments Building work Computer Skills Cooking Craft Work CV writing Doing Errands Driving Errands Gardening Giving lifts Hairdressing Help to fill out forms Help with form filling Home repairs Housework Leafleting Lifts by Car

49 Benefits identified by Housing Executive from RLCF Pilot Operates outside financial systems real benefit to those on low incomes Encourage residents to learn new skills, assist in the labour market Way to engage with socially excluded who may not otherwise become involved Energises communities recognises people as assets rather than imposing top down area based solutions

50 Benefits identified by Housing Executive from RLCF Pilot Fosters a sense of community, creates a sense of belonging and promotes respect, tolerance and diversity Reduces ASB by providing a mechanism through which young people become more integrated through the reciprocal nature Build social networks Encourage greater participation from a greater number, and broader cross section of tenants than some traditional models of engagement.

51 Carrickfergus Community Currency

52 Small Grants Programme

53 Organisation Timebank

54 What makes it different to traditional volunteering Reaches out to people who wouldn t normally volunteer Time of Our Lives, Dr Gill Seyfang, University of East Anglia (2002)

55 No society has the money to buy, at market prices, what it takes to raise children, make a neighbourhood safe, care for the elderly, make democracy work or address systemic injustices. The only way the world is going to address social problems is by enlisting the very people now classified as clients and consumers and converting them into coworkers, partners and rebuilders of the core economy.

56 For news, resources and information facebook.com/timebankingvolunteernow Upcoming Events 19 th June Moving the Coproduction Conversation Forward (in partnership with the New Economics Foundation) 2 nd October Setting up a Timebank (Free)

57 Energy Brokering SETTING UP AN OIL BUYING CLUB

58 NI Fuel Poverty & Oil Dependence Oil dependence is one of the key reasons why NI has the highest incidence of Fuel Poverty in NI ~63% households use oil as the main source of fuel Costs of heating an average 3 bedroom house with oil approx 30% more than with natural gas ( non condensing oil boiler or 1093 condensing gas boiler)* A typical 3 bedroom semi-detached house will take around 2,000-2,700 litres of oil a year to heat the house adequately (depending on oil boiler) * Many households under use fuel because they cannot afford it * Sutherland Heat Cost Tables October 2013

59 How An Oil Club Works An order is made for the total amount of oil. Payment for oil does not go through the oil club people continue to pay their supplier as before and can pay using oil savings stamps if they wish. The club gives members collective bargaining power to negotiate with the oil delivery suppliers for the cheapest price based on the total oil order. Oil suppliers benefit from fewer goods vehicle movements - a full tanker can get as little as 8 miles per gallon. If deliveries are organised so that a tanker delivers to several customers in the same area, the tanker s fuel consumption is reduced.

60 How An Oil Club Works Oil Clubs work best when it has members who can afford to place larger orders (e.g. 900 litres) as well as those members who can only afford smaller orders (e.g. 300 litres). Everyone gets the oil at the same price per litre regardless of the size of their order. Usually oil clubs will place an order once a month and will set a deadline for members to get their orders to the co-ordinator. Since the establishment of East Belfast/Cregagh Oil Club in September 2013, over 200 members have joined: 7 bulk orders have been placed for 156 households: Group savings of 2,411.21; Average savings of per order.

61 How To Start up An Oil Club Arrange a public meeting about the advantages of setting up an oil buying club Agree membership Terms & Conditions Elect Chairperson, Treasurer and Secretary & Volunteers Create memberships forms and promote club Set the buy date usually at the end of every month Set a deadline for members to get their orders to the co-ordinator. Collate the total amount of orders Research oil prices prior to the bulk buy Negotiate the cheapest price possible for the bulk order

62 How To Start up An Oil Club Confirm to all those members who ordered, the name of the successful oil supplier and the price per litre that was negotiated the order list spreadsheet to the successful oil supplier Oil supplier will contact the members on the spreadsheet to arrange payment and deliveries Inform the members / local paper of the total oil club buy and the money that was saved to help promote the club Keep accurate records of all monthly oil club buys etc on a spreadsheet and keep a back up copy as a safety measure. Alert the members to the number of days to the next big oil buy then repeat process

63 Statistics 1 st Oil buy was on Friday the 20 th September community oil club buying members joined (165 East Belfast + 49 North Belfast) 111,775 litres of oil ordered through the club (20,300 in North Belfast + 91,475 in East Belfast) 20, ,775 litres of Oil Ordered 91,475 East Belfast North Belfast

64 Statistics 226 Households got cheaper oil prices through 8 oil club bulk buys (27 in North Belfast in East Belfast) 226 Households East Belfast North Belfast

65 Statistics 40 Households got cheaper oil prices through individual brokering (9 in North Belfast + 31 in East Belfast) Members savings to date: 3, (Average ) Average savings to date: 4.57p per litre , Savings East Belfast 3, North Belfast