There is air of plain mysticism around the banking sector and the monetary reasoning around. Come money and finances to the discussion, add complexity and grievance to the max, right? Despite the complexity, encouraged by the late developments around Europe and Asia a September seminar explored the power of local, community and complementary currencies capacity to bring growth and prosperity to Helsinki.
A fine selection of thinkers, doers and influencers gathered in Valtimo, State officials designated group working space in 7.9.2017. There, just behind the Bank of Finland building, in the center of Helsinki, a day-long seminar took place under the headline “Blockchain Experiment Starting: Can local currency become new strength of Helsinki? The event was organized by Valucraft coop in collaboration with Ministry of Finance and Prime Minister’s Office, supported by Helsinki Institute for Information Technology, HIIT.
The morning was dedicated to reviewing the context of operation in law and policy and understanding the functions money takes in current global economy. A few talks the question “Why we should consider complementary currencies?”, some expressed fears on interfering such a complex matter as economy.
Johanna Kotipelto from Prime Minister’s Office opened the seminar morning with a friendly reminder, that with the PM Sipilä, the government has started to promote the experiment culture in the society. The organizers were happy to see city and governmental officials to take time for the seminar as well as a good number of citizens and academia to participate, headcount rising to 30 it total.
Keynote from Susana Martín Belmonte
The keynote was given by Susana Martín Belmonte from Instituto de Moneda Social. The institute has a mission of investigating how new monetary systems can help achieve a just, equitable and resilient society and economy, together with advancing reform of monetary-financial system in Europe. Lately Ms Martín Belmonte has been working vigorously in initiating a local complementary currency to selected districts of Barcelona.
Ms Martín Belmonte’s talk outlined the money creation mechanism in current society and acknowledged the ongoing shift from (artificial) system of scarcity to a system of prosperity. Digital revolution is changing the economy: digital services are abundant. Digitalisation and automatization, which results in lessened productivity, are changing the monetary culture as it is changing every other sector in our lives here and now. These changes in economy, the ones that are not raising productivity, are rendering a taxing of income unprofitable. Similarly, also taxing revenues has become obsolete.
Several enlightening examples of complementary currencies followed. In some cases the local currency is bound social benefits, e.g. upcoming Barcelona and Nantes experiments. For example the complementary currency experiment in Barcelona, realized a City Council, is going to provide basic income to its subjects as the city is going to test basic income and new currency simultaneously. Subsidiaries are going to be conditional or unconditional for separate test groups. During the experiment, 25% of that income is going to be paid in the new local currency. The Barcelona community currency is going run as 3-year experiment with 8,5 milj. city council money investment and 5 milj. EU funds allocated to cover research costs mainly. Ms Martín Belmonte also argued that complementary currencies are not be forced on people; they should be voluntary accepted by the citizens.
Often complementary currency is harnessed to serve businesses. Here the 80-year-old WIR and famous Bristol pound are noteworthy examples to look into. Bristol bound was originally a grassroots initiative but one supported by the city early on. Bristol bound electronic pound with a exchange to England pound whereas WIR operates between 16 000 Swiss businesses. A member of the audience raised the question of how has WIR come to be such a viable asset when other CC have been shut down? (EN critical mass) The audience recognized the importance of investigating WIR for enabling factors that have led to it’s longevity.
Ms Martín Belmonte highlighted few of the core benefits that complementary and community currencies can bring. One of them is their capacity to provide assets in financial crises, the crises being in world wide economy to local or personal in scale. Complementary currencies can provide liquidity when there is less money to go around. During crises there is more debt than money in the circulation. The prices are high and no-one whats loans, but the existing interests have to be paid. She also mentioned local currencies can incentivise shorter supply chain and benefits with smaller carbon footprint and lessen waste.
It is often believed that central banks create all money around. “Central bank money is money for banks, not people. Money is created by all banks: it’s the main role of banks”, Ms Martín Belmonte says. Banks give out loans, creating debt and money in the same time. But they do “make” or release the cash money, notes (editor’s note: which might play a role in the confusion is “the money” symbolically for the laymen) Pekka Nikander pointed out an instance from Great Britain where central Bank of England had calculated that their total value is 97% loans, 3% central bank -initiated cash money.
Next, Pekka Nikander made a brief introduction on ValueCraft co-operative’s societal purpose and goal in experimenting with taxing local currency with local currency entailing business opportunities and personal liquidy. In his words, success of the currency experiment depends on four principle factors: political support from city council, engaging user groups, getting a some funding to spark the experiment and for technical realization that enables the currency. Nikander expanded on Ms Martín Belmonte topics on differences between “bank and people money” and the three roles money has in society, which help us to grasp the systemic view on what money is. He indicated that one main of the structural disadvantages current financial systems has is that value of money is directly related to amount of money in circulation, on the side of mechanisms the money is created with.
The morning continued with Elina Liikanen from State Treasury. The key takeaways from her presentation included concerns on what might be the negative impacts of such an alternative currency as Valuecraft is about to introduce. Firstly, what is the intentions of the currency? She referred to some of the cryptoanarchistic projects to create currencies that are intended to be non-transparent for the government officials and enable tax evasion and black markets. Secondly, she suggested the use of alternative currency should be complementary to the current markets, not substitutional. The users of the alternative currency should not take market share from others, but rather grow the existing markets. The use of alternative currency should not put citizens or companies into an unequal situation over each other, which would be the case if the alternative currency services would not be a subject to tax.
Ville Viitala from Finnish Tax Administration made an effort to think outside the box. He tried to provide a view on finances by the eyes of a young person, when new technologies are changing the economy. Nowadays, majority of the taxes are collected from the income, but new ways of value creation put this into a risk. He reminded that even though the tax administration is interested in new initiatives, the experimenting tax collection with an alternative currency would require changes to the law.
Kristoffer Nærland presented Brainbot Technologies, a prospective technical partner in implementing the a digital currency, and their product. The function of the Trustlines blockchain application is based on “people powered money” -idea. The Trustlines able peer-to-peer trust networks where intermediaries, who take their cut of transactions, are not need.
Last there was a short talk from City Council member Thomas Wallgren from Social Democratic party of Finland. Despite of efforts made, the new strategy of Helsinki city does not have a policy window for local currency. Yet, he sees the sustainability as a strong focus in Helsinki area, and community currency one way to bring sustainable systems about.
The afternoon workshops
The afternoon workshops took a look forward into future with pragmatic goal setting. The purpose of the workshops was to get insights for the design of the complementary currency experiments. Simultaneously, it was a lot about getting to know others interested in the topic — and start to work together. Even though some tasks were challenging there were lots of inspired talks around: the experience was the enriching. Valuecraft thrives to keep the on-going multivoiced, crossdisciplinary way of working going throughout the experiment processes from planning to execution.
A concerned citizen approached me after the workshops in the afternoon and was some what concerned that we did not have a model of what a Helsinki local currency could look like as yet. I had hard time of answering this question. It was a most likely driven by an anxiety to see things done; not to let stage of a planning. (EN: I share this concern with the commenter.)
As an afterthought, I would have like to explain more on the process that we are working on but the process is just been build by the means of this event from a part. As we look to support economical diversity, the model and the process how we get there is on going process. Hopefully, something I would rather lavishly call an “ecosystem of experiments” will emerge to truly benefit from the empirical information the experiments. One experiment will not, most likely, tell us all we want to know. And we don’t have the audacity to tell what the experiments should be. Nevertheless, we are willing to put an effort and use our assets to take the planning forwards. After probing many cases on local and complementary currencies, I believe there is variety of currency models are yet to be found and founded. We look to come up with ones that are mindful of global economic developments but placed in the local market environment at the present and local preferences of citizens in Helsinki. These talks in the September will build a base for the design of a coherent experiments that will pilots in 2019 latest.
Yet, ‘change’ will not be televised but is happening in societies, venues and institutions, big and small. We, ValueCraft & co. are here to scaffold for the new ways of thinking money come to be. The new thinking should not exclude sections of the society, but to provide them with veritable choice and opportunity in economic life, and in life in general.
Ps. European central bank has noticed caps in our knowledge on macroeconomic functions and has called out for empirical evidence to investigate this structural discrepancies (link). In Finland, the government is asserting economic sciences position. This week the Prime Minister Sipilä announced that as a collaborative exercise between three universities in Helsinki. PM Sipilä said that he has seen in his position of a head of cabinet that “there is growing demand for economics, policy planning and impact assessment” (Kauppalehti 19.9.2017). The value on the science of money to come from somewhere. The new Helsinki Graduate School of Economics (Helsinki GSE) is going to host 15 professorships.
Pss. Susana Martín Belmonte’s new book is getting published soon! Yay! As it will get published in english ValueCraft is hoping to review it asap as it comes out.
And more: if your interest in local, community and complementary currencies to the level of academic literature check INTERNATIONAL JOURNAL OF COMMUNITY CURRENCY RESEARCH https://ijccr.net
Videos from the event can be found in the previous post.