The New Money

The New Money – A Conversation with Professor Jem Bendell (Published in the World Council of Peoples for the United Nations’ ‘Centerpoint Now’ 2014)

NR: What’s wrong with the financial system?

JB: In the next 10 years there will be over a billion young people coming into the global workforce and just 300 million jobs between them. How is it that with so much need in the world,
so many people can’t get a job? Could it be that our mechanism of exchange–our monetary system–is restricting us from working together, for mutual gain?

In most countries, about 3% of money originates from government mints. The rest is digital, created by banks out of nothing when they issue loans. The banks create the amount borrowed, but not the interest to be paid, so there is more debt than money. Individually we might pay off our debts, but collectively we are in debt forever and paying interest to banks. This system makes increasing inequality a mathematical certainty.

NR: What is the answer?

JB: Wholesale monetary reform. We need our currencies to always be in sufficient supply to match underused assets with unmet needs. To avoid a caregiver sitting unemployed, while someone needs care, or a building lying empty, while people are homeless. Money should simply be the mechanism we use for measuring and exchanging things of real value.

NR: How would we design such currencies?

JB: We already are. Across the world, people are trading in currencies their own communities run, from slums in Nairobi to enterprise hubs in Brussels. A few months ago, an alternative online currency, called TEM, was introduced in the Greek city
of Volos. Members holding accounts can exchange as much as they wish, without it being restricted by availability of euros, and everyone ends up returning to zero, so no one makes money out of issuing the currency or charging interest.

NR: Could these alternative currencies co-exist with fiat currencies?

JB: The oldest and largest mutual credit system–the WIR in Switzerland–has existed since 1934, and has over 70,000 members trading over 2bn WIR a year. Eighty percent are small firms that find it important for keeping business going during downturns. That’s when banks restrict new credit, especially to small businesses, so these firms increase their use of the WIR to buy inventory from other participating firms. Research shows the WIR has helped the Swiss economy suffer less severe economic cycles than its neighbours.

NR: How can alternative currencies help us meet sustainable development goals?

JB: With our current interest-charging system of money creation,we have no choice but to grow the economy, otherwise there will be less new debt issued to service existing debts, and there will be defaults, foreclosures, bankruptcies, unemployment and depression. History shows us this all leads to crime, extremism and even war, to say nothing of the environmental damage caused by the ever-increasing extraction of resources that such economic growth requires.

With alternative currencies, however, as all credits and debits ultimately cancel each other out, you don’t find increasing amounts of money chasing the same amount of stuff or services, so the currency doesn’t inflate. And no interest is charged upon the issuing of credit, so wealth isn’t extracted from those with lower incomes.

And as most alternative currencies are locally-focused, they encourage us to trade locally, reducing our carbon footprint and promoting community regeneration.

NR: If alternative currencies are locally-focused, how can they be used to address global issues?

JB: Many of them may have been developed in local communities, but the Internet means they can scale globally and sustainably. I am part of a Swiss-NGO called Community Forge with over 50 community currencies, from Belgium to Bali, using free, open source software. Because it operates online, members from different countries can easily trade amongst each other.

And there’s the Ven – a digital currency that represents a basket of commodities, other currencies and carbon credits. Last year it was the first digital currency to be added to Thomson Reuters, making it possible for global financial institutions to trade in it.

As you start to use alternative currencies, you sense the scarcity we experience where we struggle to make ends meet is partly artificial. It comes not from a lack of wealth in our communities, but from a mechanism of exchange based on outmoded design. Alternative currencies offer a revolutionary change we can all play a part in.


Professor Jem Bendell is the Director of the Institute for Leadership and Sustainability (IFLAS) University of Cumbria. His latest report, ‘The Necessary Transition: The Journey towards the Sustainable Enterprise Economy’ can be downloaded at: content/pdfs/TNT_bendell.pdf