Monday, February 28, 2011

Welcome to my World: My world I


How would my local area look like if the financial institution I have in mind would take place?? Relationships with the local community. 

First of all: Yes, the bank would have a direct and tangible effect on my local area. If the community is unsatisfied, if there is unemployment, any type of social or environmental injustice, the bank has a role to play in that situation. Equally, if I live in a community that projects social cohesion, that is vibrant and resilient, my bank would have contributed to that too. Each branch is a projection of the community and its success or failure depend on the actions of the locals. To ensure that, the bank has two main products to offer. One is its banking platform, which is designed as a tool for local action. This means that there are no top-down decisions or hierarchical processes. The platform is a tool that allows its users to have direct and transparent impact in their communities. The second product is an educational program where future bank users can gather inspirational information to make of their places and lives, the places and lives they have always dreamed of. The program is designed so that no one tells you what to learn, but where options are offered for you to choose to learn what you want from them and bring to your local community and the world, that which you are good at and passionate about.  

Todays post is mostly about the banking platform. Here is the story:

I live in a suburb that is highly inhabited by Africans, there are two major business streets, a few of the big banks have branches here, and in general it feels very alive. I do not have much contact with my general neighbors, and barely know those who live in my own building. Now, here it comes this guy who tells me that met someone from across the street at the restaurant the other day, who wants to open a branch of a new social bank in our suburb. The bank promotes localization, social justice, spiritually fulfillment and environmentally sustainable actions. They argue that if the community as a whole can substitute the imports, then more money should be able to circulate amongst us, and we should be able to generate more employment. They stand up for economics of abundance rather than of scarcity. So an economic renewal plan we'll be created by us, the people who live here. It would be an opportunity to creatively and efficiently substitute our imports with local produce and sustainable products and services. 

He says that there will be a lot of things that we'll find to be absent in our local economy, so there may be a lot of projects to, for example and among many others, re-skill the community. Particularly in topics like [peer to peer] energy and food production, housing and transport. So I asked about funding for all these projects. You know? where from would these people get the money to pay their rents and food and resources they need while they use their time to re-skill us or while we take the time to learn?? The answer was: The bank would lend interest-free money to these projects using our savings. So, really, the community will fund these projects. 

The bank has an online platform where all the projects are visible to the public, all users can access the project profile, ask questions and make comments. Projects leaders answer any queries from other users of the bank. They should provide enough information as to how their project is environmentally sustainable, socially just and spiritually fulfilling. They also need to say how much money their project requires and a plan to repay this amount. Users vote if and how much money they'll put towards a project. 

Once this project has succeeded at replacing what used to be an import to the local economy, the community should be able to accept a local currency to get access to this good or service. In that way, the borrower pays back the amount borrowed to the users that committed their savings and they can then, use their savings for another project available to the community. Lenders can see value added to their money when they start experiencing the benefits of these newly created local products, therefore, users will not be given interest in cash in return for their money. Official currency devaluation may be balanced with local currency strengthening the local economy. 

It was the first time I heard about a local currency. My friend however, was not well informed about it either. We agreed on inviting this guy to my place to have some tea and chat about it. It was inspiring!! He talked about many types of local currency systems. They can be designed for different purposes and to meet different needs. Generally, the main difference is that users, that is you, or me, create the money! We actually issue it. Their banking software allows us to do that. So the bank does not put the numbers in your account when you ask for a money, I do!! or someone else does!! (assuming we want to put some money towards your project in either official or local currency). The local currency system I felt in love with was Mutual Credit Systems. You don't need your account to be positive in order to spend your credits, but you need to ensure that you have something that the community values enough to get from you, so that someone would credit your account in the future. In other words, you don't need to have money to trade!. You need to be able to produce. You have to be equally a producer and a consumer. Now import substitution and economic renewal kind of makes more sense to me! 

What sort of local currency we'll put in place and the design process is up to us and our local conditions. Although the bank is a strong advocate of Mutual Credit Systems, their banking platform supports all designs, even if they are designed to use no currency at all. That feature would allow us to trade with other communities in our cities and around the world. Equally would the banks cards. 

I was a bit concerned about particular groups of people, like the elders, who are seen by our culture as the ones who imply costs to the community and are not seeing as producers. How would they be benefited by this approach?? The answer was that all these issues have to be put on the table by the community and the answers will also come from it. A determined community cannot leave its elders behind, otherwise that would not be socially just. Projects will come out to tackle this issue, local currencies can be designed for this particular population, or the community can decide that they do not have to produce. A project to change and re educate the community's perspective towards the elders is also very viable, in order to bring their knowledge and wisdom back to live, and to change out to date perceptions.

Something that really got my attention is that, according to this guy, the aim of the bank is to strengthen our social structure. He says that behind everything we buy, there are people behind it who connect to others in order to bring about the good or service they offer. So they are after social cohesion and community trust rather than mere consumption/consumerism. A lot of the current products you see around in your supermarkets would just be non-sense for your community. Think of those products that evolve into large amounts of diabetic or obese people. They could be labeled as socially unjust. They are not supplied by your community, you are not aware of the social processes involved in them, neither do you know about the environmental and health issues related to them. You can't ensure that your money is providing fair wages, or promoting research to reduce the use of emulsifiers or some other additives you add to your body when you consume them. You cannot know that the people behind these products actually care about you. The idea of this bank is that it fosters the creation of goods and services that put in evidence how people care about each other. 

Essential to this process is the redefinition of words like 'money', 'value' and 'profits'. Money has not value by itself, it is not money per se what matters, but the message it carries. A message about the overall health of the community. Value is added through fostering social cohesion and sense of place, interest, fulfillment and community. Profits make sense only in the context of having the capacity to support the projects of the community. Profits, as accumulation of money, do not make sense anymore. Money is a catalyst for processes, not a barrier, and an evidence of the abundance and aliveness of our community. 

When most of the imports have been substituted and there is a vibrant local economy, it should be expected to have more local currency circulating than official currency. That implies that the users' savings in official currency will be available for users to support other initiatives in other areas or even countries, to foster the same process of localization, resilience and community building. New projects in my own area can now be supported with local currency in the same way that they were once supported by official currency. This is what the bank calls 'redistribution of money that has already been created through the mainstream banking system'. When your official money supports projects in developing countries with this same mechanism, you can sense a brighter future for the alleviation of poverty and creation of abundance. The bank promotes decentralization, it is an institution that promotes currency diversity as a strategy for community building, social cohesion, resiliency, holistic sustainability and spiritual fulfillment. Every branch of the bank would be connected to a global 'server' and users from anywhere in the world can see who is doing what where.

Your project does not need to be completely defined, you can just enter your idea and the community, through comments and future engagement, which is up to you how much you allow them to contribute to your thoughts, would build the idea with you until it becomes a project. After that, people vote to admit the project and commit credit to it. Lenders would own the percentage of your business/project that they committed with credits, so in a way, they play a key role in the practical success or failure of the project, it is in their interest that you succeed. There is no theoretical failure. Users should not reject any ideas on the basis that it is prone to failure, since the community needs to try and learn from what worked or didn't work in practice. That is why, we are allowed to make comments and co-create the projects in order to minimize risks when credits are committed. Thus, if a project does not work, the loss would be assume by all contributors, not only the ones who brought the idea forward.

The bank reproduces and makes presence around the world through, let's say, franchises that pay a periodical subscription to the global branch to ensure up to date products. If you hear about this bank, no matter where you are, you should be able to open a branch in your area. This is done through our educational component which is a membership based online program that would widen your knowledge and give you all the tools to start your own branch.

Have a look at this video and imagine this dashboard working in a very similar way but with action projects. 


Your questions and comments will contribute to build the vision of the world we can create through this project. 


1) I have been having conversations and also reading quite a bit, which has helped me to evolve some thoughts. So far, I am not sure if the products that I am talking about will actually be the bank's products or if this is the start of the consolidation of the New Economics for Humanity as a (global??) organization/institution and they will be its products. 

2) I haven't figured out how and when, either the bank or the NEH as an organization would be in the position to accept credits (as in, a complementary currency) for their products, which suggests to go through the design of complementary currency system for the institution itself.

3) The development of the banking platform is the key task of this post and it may involve connecting this project with key partners. I think of the educational component, which I'll post about next, as the product that will generate funding for this and following developments. 

4) Remember, if you want access to the project's 'office' in BetterMeans, send me an email to and I'll send you an invitation. You can also join a our skype group. Add me: tatiana.maya.valois

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