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Raise of complementary currencies and the possiblities for the financial industry
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and the possibilities for the financial industry
Raise of virtual currencies
NetFinance Conference, London
Harrie Vollaard, Innovation, November 19. 2013
The raise of alternative currencies (C2C)
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The raise of alternative currencies (B2B)
http://www.complementarycurrency.org/ccDatabase/maps/worldmap.php
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Why
1. Change within the financial industry:
a. The financial crisis has changed the playing field; banks seen as part of the problem; public seeking fair solutions.
b. Shift from financed by banks to financed by the capital market
2. Change within society: Raise of sharing economy
3. Change of technology: Technology means business models for financial services will change; financial institutions need innovations.
Money 1.0 = Past
Decentralised & Disconnected
When money was physical in the form of valuable objects such gold & silver coins, tokens, or the records of local networks of trust.
Money 2.0 = Present
Centralised & Connected
97%+ of money we use is electronically and facilitated by banks.
Money 3.0 = Future
Decentralised & Connected
Private currencies issued by companies, communities and, perhaps, local authorities.
1. Trade Exchange B2B - mutual credit Business 2 Business, unit = trade credits/dollars 2. Corporate Barter B2B- central credit Issuing, unit = trade credits/dollars
3. Corporate Trade Exchange B2B - hybrid Corporate/ Trade Exchange, unit = trade credits/dollars 4. Loyalty Exchange B2C - hybrid Trade Exchange business 2 citizen , unit = points
5. Air miles rewards - propriety, coalition operated by airlines unit = air miles 6. Loyalty programs - propriety, coalition consumer rewards, unit = points
7. Time bank - social exchange, unit = hours 8. Time bank - professional exchange, unit = (multiple) hours
9. Local Exchange Trading System C2C - mutual credit citizen 2 citizen, unit = LETS credits 10.Local paper currency - discount shopping, = paper currency/scrip
11.Local fiat currency - paper and digital 12.Social media currency - Facebook, QQ, unit =points
13.Games consoles currency - Wii, Xbox, play station etc, unit =points 14.Gamer currency - e.g. Second Life, unit = points
15.Charity exchange - mailing list exchange for fund raising, unit = points 16.Media exchange - discount shopping = paper currency/scrip/points
17.Incentive exchange - employee or citizen rewards program, unit = points 18.Metal based - gold, silver and copper coins or digital, Liberty Dollar etc.
19.Commodity based – baskets of commodies like Ven or energy-backed currencies 20.Cryptographic - encrypted files created by CPU power e.g Bitcoin, units = depends 21. Reputation – based upon social media reputation e.g. Flattr, Mobbr, units = points
Diversity of Currencies
Trade currency within Barter network
Barter network (Mutual Credit Systems)
• A group of businesses create a group credit for their goods & services
• Each business in the group is given an amount of credit that is backed by the commitment of the other businesses.
• Either electronic database, or even coupons act as a currency that is backed by excess capacity of the business community.
Worldwide, more than 400,000 companies are members of one or more of the hundreds of Trade (“Barter”) Exchanges. Various sources estimate the volume of non-monetary
trade worldwide to be between 15% to 25% of the total.
Examples of existing barter networks
Bartercard was founded in 1991 and has about 75,000 cardholders operates in 13 countries in the Asian Pacific Rim (including Australia), Middle East, and Europe.
ITEX was founded in 1982, ITEX is a publicly traded company and is one of the largest trade exchange networks in the United States, and has about 24,000 cardholders in the North American
market.
IMS was founded in 1985, IMS is a publicly traded company and is one of the largest trade exchange networks in the United States, and has about 23,000 cardholders in 51 North American
markets.
BBX was founded in 1993, BBX currently has about 8,000 cardholders in Australia, New Zealand, India, Costa Rica and China. BBX is the first barter exchange manager to list on the Australian
Stock Exchange (ASX)
WIR was founded in 1934 and has about 80,000 cardholders operates in Switzerland only among whom is traded approximately CHF 2.5 billion annually (over $2 billion US dollars)
All of the DEBT plus all the CREDIT
in the system will always equal ZERO
Credit + Debt = Zero
Barter network = Trade Exchange
Business Non Member
UNSOLD = Dead Capital Excess Capacity
Empty Hotel Rooms Idle Stock/Inventory Empty Appointments Lost Sales/Lost Profits
Vacant Restaurant Seats Under Performing Assets Downtime Idle inventory
Business Member
TRADE CREDIT INCOME = New Customers
New Additional Sales New Extra Income
Improved Cash flow Improved Cash Profits
Replacing Cash Expenses
Cash Income Trade
Credit Income
Cash Expenses Cash
Profit
Trade Credit
Expenses
Cash Income + Trade Credit Income
Cash Income UNSOLD
Dead Capital
Cash Expenses Cash Profit
Potential Cash Income
Businesses UNSOLD is Dead Capital
Trade Credit income REPLACES cash expenses which in return increases profits
Lost Income
Unlocking unsold capacity
Why Popular? Unsold Capacities
ADVERTISING
AIRLINE
HOTELS
LABOUR
MANUFACTURER
PRINTER
RETAILER
RESTAURANT
SERVICES
All Businesses Have UNSOLD Capacity Or Inventory
Advertising space and slots
Tickets empty seats
Rooms seasonal business
Jobs unbilled hours
Production and idle inventory
Down time on printing presses
Stock and end of line goods
Table seats quiet mid-week
Time unfilled appointments
UNSOLD
UNSOLD
UNSOLD
UNSOLD
UNSOLD
UNSOLD
UNSOLD
UNSOLD
UNSOLD
Advantages
1. Provide the productive sector with a reliable source of credit that is sufficient, interest-free, and community controlled.
2. Improved customer retention
3. Improved turnover, profit and liquidity ratio:
o Improved turnover between 5% - 20% (unlocking unsold capacity)
o Saves EURO’s by interest free supplier credit
o Improved cash position by €5K – € 200K
o Reduce dependence on banks and scarce currencies ($, €, ¥, etc.).
Time currency within WeHelpen
2-12-2013
2-12-2013
21
6 principles
• Earn
• Spend
• Appreciate
• Donate
• Redeem
• Stimulate
22
Fu
nd
M
ark
etin
g
We H
elp
en o
rganis
atio
n
Nationwide reward organisations
Reward
neighboorhood B
Nationwide redeem options
Redeem option B Redeem option C
Demurrage CC Reward Exchange Redeem Donate Marketing
Reward Club C
Demurrage
• 1% per month
• < 50 credits: no interest
• > 50: 1 credit per month
• Being part of the system
• Accounting and credit clearing services
• Financial analysis and determination of creditworthiness
• Safe storage of various currencies and digital assets
• Payment systems
• Sales of financial products (cross sell), like insurance
• Revenues derived from:
o service fees (transaction fees, evaluation fees, brokerage fees)
o data analysis, advertising and sales of additional services
*
Future of Banking Services?
Wellbeing
customer
Physical
Social Phychological
Economic Environment
Focus Financial industry
Focus Timecurrency & Barter network
Complementary systems
Summary; it is just the beginning
• There is potential from these innovations in terms of their wider effect on society.
• As a cooperative bank needs fair and sustainable innovations. The challenge is to find fair business models for the bank using complementary currencies.
• Learning by doing: be active in a number of ways where Rabobank enhances its co-operative approach to monetary innovation, and has horses in the race and shapes the rules of the game.
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