Redesigning the role of money, the different proposals regarding institutional money

Another Financial system & Money for Finland

Discussion series

Report of the second discussion: Redesigning the role of money, the different proposals regarding institutional money.

Around 40 people were present at Lintulahdenkatu 10 on 15.12.2015 to discuss about the problems and proposals around institutional money. The session was co-organised with Kansan Sivistystyön Liitto KSL ry.

Central questions put upfront for the discussion were:
– How should monetary institutions be organized?
– Could the euro be fixed and democratized?
– Are there good reasons to exit the euro?

Ruby van der Wekken welcomed to this second event of the discussion series and the Alternative Financial system & Money for Finland process at large, which was moderated by Patrizio Laina.

Ville Iivarinen opened the discussion on what would be the preferred money system. Ville said that the present monetary system is a monopoly of bank-debt money. This gives the banks huge privileges and forces the government to subsidize the banking sector in a number of ways. Present monetary system has led to a number of problems in society, ranging from high levels of debt, highly cyclical economy and repeated financial crises.

Ville continued to say that money creation could and should be removed from the banking sector entirely and given to a public institution. Monetary reform would make it possible for money to be spend into the economy instead of money being lent. This could give us a far less cyclical economy, drastically reduce the level of debt in society, make the banking system more stable and remove the moral hazard and it would enable the government to spend more money than presently.

The most common concerns with monetary reform include potential political misuse of money creation, lack of funding for investments, inflation if too much money is created or deflation and economic recession if inadequate amounts of money are created.

Ville’s slides
See also see also Ville’s book ”Raha – Mitä se todella on ja mitä sen tulisi olla?

Bruno Theret, French economist at mm Veblen institute who was present via skype, referred to the current state of global financialisation and the union of political elite with financial intrests, and said to see democracy as only being able to develop through grassroot social movement, from the bottom-up and that of these social movements complementary currencies have an important role to play, with their ”aim to give back to people the sovereign power to issue and control the monies needed for a good life and the access to and holding of democratic rights”, which should also include public local government initiatives issueing local fiscal currencies.

Bruno referred to earlier events in Argentina as an example of what could be a Plan B for southern european countries as Greece that don’t want to quit the eurozone for political reasons, but that do want to exit from austerity policies viewed as a dead-end and as a threat to people survival, and ended with a proposal for emissions of complementary to the euro national fiscal currencies by the EU members states that need it, and which are maintained at par with the euro.

Bruno’s written out talk
See also Bruno and  Wojtek Kalinowski’s article ’The euro as common money, not as single currency

Antti Ronkainen spoke about the need to confront the EU institutions in order to liberate us from fiscal austerity. His proposal was that, first, we should raise the pirat flag and just break the rules regarding fiscal austerity. Hopefully, of course, this would be enough to allow autonomous fiscal policy and would not lead to any sanctions. If this would not be enough, Finland should introduce a parallel currency. If this would lead to hostile reactions from the EU institutions (especially the ECB by blocking the payment system as happened in Greece), then Finland should leave the euro and adopt a sovereign currency.

Antti’s slides
See also see also the report written by Antti and Joel Kaitila, ”Talouskurista autonomiaan”, and Markka pelastaisi hyvinvointivaltion


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