Brixton Pounds | by Ruth Potts

Monetary reform

Money and credit have become disconnected from the real economy, from productive investment and sustainable growth. New, more democratic forms of money are required in the transition to a low-carbon economy.

The financial crisis has revealed the fragility of our current money system, both in the UK and internationally. Money has become disconnected from the real economy, from productive investment and sustainable growth. A combination of centralisation, globalisation and deregulation has allowed private financial institutions to create a credit bubble which has now burst. Internationally, measures are urgently needed to address the large trade imbalances that remain the single largest threat to economic stability.

What we're doing
Research on monetary reform at nef investigates how a more resilient money system can be built that supports a sustainable economy geared towards maximising social justice and well-being. The work builds on nef’s track record of innovative and provocative reports, which have addressed credit creation and alternative and complementary currency systems as well as the role of money in a more equitable and sustainable global financial system.

New work on monetary reform will examine the evolution of money and the financial system. We'll be asking why money became 'de-coupled' from the real economy and thinking about the negative consequences of this disconnection. We'll also be looking at how credit is created and controlled by governments and private banks, and examining whether alternative currencies and exchange systems might be more effective, and more democratic. And in the arena of global finance, we'll be exploring various international currency options, such as Special Drawing Rights (SDRs).

Specific questions we will address include:

  • What is money primarily needed for at different levels, locations and scales?
  • What forms and scales of ‘money’ can deliver these outcomes?
  • What is the right balance of connectedness and autonomy for alternative currency regimes?
  • What are the current barriers, political and economic, to scaling up and spreading the use of complementary currencies?
  • How should national monetary authorities, private banks and complementary currencies interact for the creation of money?

 

Key facts

  1. 1
    Notes and coins now account for only 3% of total money supply, down from 50% in 1948.
  2. 2
    The BerkShare, the hard complementary currency of the Berkshire region of Massachusetts, USA, has a circulation of 2.2 million notes.
  3. 3
    In 2007, the commercial barter industry enabled trades worth more than US$10 billion and 400,000 businesses firms use the system.
  4. 4
    The UK has four hard complementary currencies in circulation, in Totnes, Lewes, Stroud and Brixton.

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