Special Issue "Monetary Plurality and Crisis"

A special issue of Journal of Risk and Financial Management (ISSN 1911-8074). This special issue belongs to the section "Risk".

Deadline for manuscript submissions: closed (30 June 2021) | Viewed by 25814

Special Issue Editors

Prof. Dr. Georgina M. Gomez
E-Mail Website
Guest Editor
International Institute of Social Studies, Erasmus University Rotterdam, Kortenaerkade 12, 2518AX The Hague, The Netherlands
Interests: institutions; social economy; development studies; complementary currencies; money local economic development
Dr. Leander Bindewald
E-Mail Website
Guest Editor
Monneta gGmbh, Ginsterweg 5, 31595 Steyerberg, Germany
Interests: complementary currencies, monetary ontology, institutionalism, financial regulation

Special Issue Information

Dear colleagues,

“After the financial crisis” can always be seen as the period before the next financial crises. Even in periods of relative stability, economic inequalities and climate calamities are stretching the social fabric on the local, national, and international levels. Complementary currencies have been deployed to supplement conventional currency systems and ameliorate their shortcomings, even before the emergence of cryptocurrencies. Thus, monetary plurality is a reality not only during financial crises, but it is a recurrent characteristic of capitalist economies. Monetary monopoly over a national territory is a mission that has never been completely accomplished.

This Special Issue focuses on the role of individual complementary currencies and monetary diversity generally in stabilizing our financial systems and alleviating the impact of risk and crisis on the local, national or international scale. Research questions welcome for this publication include, but are not limited to, the stabilizing or destabilizing effect of complementary currencies within monetized capitalist societies, their life-cycles in relation to national and international crisis, the impact of blockchain technologies in the application of currency innovations, and the conceptual and regulatory paradigms that support or impede monetary diversity as a key element of systemic resilience.

We invite original contributions in English that focus on issues of mitigation of risk, monetary resilience, and economic and social sustainability. Eligible contributions are not limited to quantitative methods. Data and core findings need to be presented in minimum one diagram or chart. 

We encourage papers from the global South and aim to give attention to a diversity of authors and contexts. Limited financial support for publication fees and proofreading is available to excellent submissions by authors without other sources of institutional funding. Please contact the editors of this special issue about Article Processing Charges (APC) and possible reductions.

Prof. Dr. Georgina M. Gomez
Dr. Leander Bindewald
Guest Editors

Manuscript Submission Information

Manuscripts should be submitted online at www.mdpi.com by registering and logging in to this website. Once you are registered, click here to go to the submission form. Manuscripts can be submitted until the deadline. All submissions that pass pre-check are peer-reviewed. Accepted papers will be published continuously in the journal (as soon as accepted) and will be listed together on the special issue website. Research articles, review articles as well as short communications are invited. For planned papers, a title and short abstract (about 100 words) can be sent to the Editorial Office for announcement on this website.

Submitted manuscripts should not have been published previously, nor be under consideration for publication elsewhere (except conference proceedings papers). All manuscripts are thoroughly refereed through a single-blind peer-review process. A guide for authors and other relevant information for submission of manuscripts is available on the Instructions for Authors page. Journal of Risk and Financial Management is an international peer-reviewed open access monthly journal published by MDPI.

Please visit the Instructions for Authors page before submitting a manuscript. The Article Processing Charge (APC) for publication in this open access journal is 1200 CHF (Swiss Francs). Submitted papers should be well formatted and use good English. Authors may use MDPI's English editing service prior to publication or during author revisions.

Keywords

  • complementary currencies
  • crypto currencies
  • pluralistic monetary theory
  • currency crisis
  • financial crisis
  • financial inclusion
  • monetary innovation
  • social and economic sustainability
  • monetary stability

Published Papers (10 papers)

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Research

Article
Complementary Currencies for Humanitarian Aid
J. Risk Financial Manag. 2021, 14(11), 557; https://doi.org/10.3390/jrfm14110557 - 18 Nov 2021
Viewed by 2017
Abstract
The humanitarian sector has gone through a major shift toward injection of cash into vulnerable communities as its core modality. On this trajectory toward direct currency injection, something new has happened: namely the empowerment of communities to create their own local currencies, a [...] Read more.
The humanitarian sector has gone through a major shift toward injection of cash into vulnerable communities as its core modality. On this trajectory toward direct currency injection, something new has happened: namely the empowerment of communities to create their own local currencies, a tool known as Complementary Currency systems. This study mobilizes the concepts of endogenous regional development, import substitution and local market linkages as elaborated by Albert Hirschman and Jane Jacobs, to analyze the impact of a group of Complementary Currencies instituted by Grassroots Economics Foundation and the Red Cross in Kenya. The paper discusses humanitarian Cash and Voucher Assistance programs and compares them to a Complementary Currency system using Grassroots Economics as a case study. Transaction histories recorded on a blockchain and network visualizations show the ability of these Complementary Currencies to create diverse production capacity, dense local supply chains, and data for measuring the impact of humanitarian currency transfers. Since Complementary Currency systems prioritize both cooperation and localization, the paper argues that Complementary Currencies should become one of the tools in the Cash and Voucher Assistance toolbox. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Crisis Mitigation through Cash Assistance to Increase Local Consumption Levels—A Case Study of a Bimonetary System in Barcelona, Spain
J. Risk Financial Manag. 2021, 14(9), 430; https://doi.org/10.3390/jrfm14090430 - 08 Sep 2021
Viewed by 1081
Abstract
Subsidies in the form of direct transfers from the government to citizens constitute a powerful mechanism for crisis mitigation and for the alleviation of economic inequalities. However, the connection between direct transfers of cash assistance to selected individual beneficiaries and the prosperity of [...] Read more.
Subsidies in the form of direct transfers from the government to citizens constitute a powerful mechanism for crisis mitigation and for the alleviation of economic inequalities. However, the connection between direct transfers of cash assistance to selected individual beneficiaries and the prosperity of their immediate surrounding local economy has not been sufficiently explored. This paper presents a case study which analyzes the effects of allocating cash assistance in the form of a local currency. It shows that, under certain conditions, such a transfer not only provides the beneficiaries with additional purchasing power to satisfy their needs but also that the monetary injection benefits local SMEs by generating additional turnover. Using transactional data from the system, some indicators are proposed to analyze the properties of the system, namely, user satisfaction, total and average income generated by local businesses, the local multiplier, the recirculation of the local currency, and the velocity of its circulation. Our findings indicate that cash assistance provided in the REC local currency could contribute to local economic development and financial stability by sustaining local commerce, while preserving most of the original positive effects of cash assistance in a legal tender. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Computational Analysis of the Properties of Post-Keynesian Endogenous Money Systems
J. Risk Financial Manag. 2021, 14(7), 335; https://doi.org/10.3390/jrfm14070335 - 20 Jul 2021
Viewed by 1507
Abstract
The debate about whether or not a growth imperative exists in debt-based, interest-bearing monetary systems has not yet been settled. It is the goal of this paper to introduce a new perspective in this discussion. For that purpose, an SFC computational model is [...] Read more.
The debate about whether or not a growth imperative exists in debt-based, interest-bearing monetary systems has not yet been settled. It is the goal of this paper to introduce a new perspective in this discussion. For that purpose, an SFC computational model is constructed that simulates a post-Keynesian endogenous money system without including economic parameters such as production, wages, consumption and savings. The case is made that isolating the monetary system allows for better analysis of the inherent properties of such a system. Loan demands, which are assumed to happen, are the driving force of the model. Simulations can be run in two modes, each based on a different assumption. Either the growth rate of the money stock is assumed to be constant or the loan ratio, expressed as a percentage of the money stock, is assumed to be constant. Simulations with varying parameters were run in order to determine the conditions under which the model converges to stability, which is defined as converging to a bounded debt ratio. The analysis showed that the stability of the model is dependent on net bank profit ratios, expressed relative to their debt assets, remaining below the growth rate of the money stock. Based on these findings, it is argued that the question about the existence of a growth imperative in debt-based, interest-bearing monetary systems needs to be reframed. The question becomes whether a steady-state economy can realistically support such a system without destabilising it. In order to answer this question, the real-world behaviour of economic actors must be included in the model. It was concluded that there are indications that it might not be feasible for a steady-state economy to support a stable debt-based, interest-bearing monetary system without strong interventions. However, more research is necessary for a definite answer. Real-world observable data should be analysed through the lens of the presented model to bring more clarity. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Persistent Food Shortages in Venetian Crete: A First Hypothesis
J. Risk Financial Manag. 2021, 14(4), 151; https://doi.org/10.3390/jrfm14040151 - 01 Apr 2021
Viewed by 794
Abstract
This paper examines the persistent food shortages in the island of Crete under Venetian rule (1204–1669) through the prism of the monetary system of Venetian territories and in combination with the other economic policies of the Venetian empire. From the available sources and [...] Read more.
This paper examines the persistent food shortages in the island of Crete under Venetian rule (1204–1669) through the prism of the monetary system of Venetian territories and in combination with the other economic policies of the Venetian empire. From the available sources and analysis, it seems that the policies of Venice which prioritised the food security of the metropolis, the financial support to the elites, and the elite-favouring monetary and taxation system were contradictory and self-defeating. In particular, the monetary structure of the colonial economy and the taxation system seem to have been forcing both Cretans and Venetian settlers to produce wine for export instead of grain despite the repeated food shortages. The parallel circulation of various high-value (white money) and low-value (black money) currencies in the same economy and the insistence of the Venetian administration to receive taxes in white money seems to have been consistently undermining the food security policy adopted by the same authorities. The paper contributes to the discussion of how parallel currencies can stabilise an economy or can create structural destabilisation propensities, depending on coeval economic structures that usually go unexamined when we examine monetary instruments. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
Article
Crisis and the Role of Money in the Real and Financial Economies—An Innovative Approach to Monetary Stimulus
J. Risk Financial Manag. 2021, 14(3), 129; https://doi.org/10.3390/jrfm14030129 - 20 Mar 2021
Cited by 1 | Viewed by 1513
Abstract
‘Financial crisis’ is sometimes regarded as synonymous with ‘economic crisis’, but this is an oversimplification and risks missing the feedback loops between the financial and real economies. In this paper, the role of money is revisited in the context of distinguishing the real [...] Read more.
‘Financial crisis’ is sometimes regarded as synonymous with ‘economic crisis’, but this is an oversimplification and risks missing the feedback loops between the financial and real economies. In this paper, the role of money is revisited in the context of distinguishing the real economy from the financial economy. A theoretical framework is developed to explain how endogenous (bank credit) and central bank exogenous (quantitative easing, QE) money creation feed into the real and financial economies. It looks at how the velocity of monetary circulation varies between the two economies and across asset types within the financial economy. Monetary transmission mechanisms are set into a framework that helps explain how QE stimulus risks combining asset price bubbles with poor growth in the real economy. The real economy transmission mechanism of ‘helicopter money’ is given context, enabling an assessment of the efficacy of both the QE and helicopter money policy routes. Finally, we present a new type of monetary transmission, ‘Smart Helicopter Money’, to deliver monetary stimulus to innovators, SMEs and high-growth firms via both complementary currencies and a modified form of QE in order to achieve proportionally greater impact on the real economy. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Inconsistent Definitions of Money and Currency in Financial Legislation as a Threat to Innovation and Sustainability
J. Risk Financial Manag. 2021, 14(2), 55; https://doi.org/10.3390/jrfm14020055 - 27 Jan 2021
Viewed by 1335
Abstract
External shocks, like the climate catastrophe or the COVID-19 pandemic, as well as intrinsic fallacies like the securitization of bad debt leading up to the financial crisis in 2008, point to the need for updating our monetary and financial systems. Ensuring their adequacy [...] Read more.
External shocks, like the climate catastrophe or the COVID-19 pandemic, as well as intrinsic fallacies like the securitization of bad debt leading up to the financial crisis in 2008, point to the need for updating our monetary and financial systems. Ensuring their adequacy and resilience is an important factor for sustainability at large. This paper examines the definitions of “money” and “currency” in financial legislation as a foundational factor in achieving systemic resilience by allowing or hampering monetary innovation and diversity. From the unencumbered vantage point that the practice of complementary currencies offers, definitions of the terms “money” and “currency” are here traced through the laws and regulations of the United States of America, from the beginnings of modern banking to the recent rulings on crypto-currencies. They are both found to be used and defined in contradictory ways that are inapt even in regard to conventional modern banking practices, let alone when applied to novelty in payment, issuance and valuation. Consequently, this paper argues that basic legal definitions need to be reviewed and consolidated to enable the innovation and diversification in monetary systems needed for long term macro-economic stability. With this in mind, a terminology that is consistent with monetary practice—current, past and future—as well as the procedural difficulties of reforming laws and regulations is proposed. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Liquidity-Saving through Obligation-Clearing and Mutual Credit: An Effective Monetary Innovation for SMEs in Times of Crisis
J. Risk Financial Manag. 2020, 13(12), 295; https://doi.org/10.3390/jrfm13120295 - 27 Nov 2020
Cited by 2 | Viewed by 10520
Abstract
During financial crises, liquidity tends to become scarce, a problem that disproportionately affects small companies. This paper shows that obligation-clearing is a very effective liquidity-saving method for providing relief in the trade credit market and, therefore, on the supply-side or productive part of [...] Read more.
During financial crises, liquidity tends to become scarce, a problem that disproportionately affects small companies. This paper shows that obligation-clearing is a very effective liquidity-saving method for providing relief in the trade credit market and, therefore, on the supply-side or productive part of the economy. The paper also demonstrates that when used in conjunction with a complementary currency system such as mutual credit as a liquidity source the effectiveness of obligation-clearing can be doubled. Real data from the Sardex mutual credit system show a reduction of net internal debt of the obligation network of approximately 25% when obligation-clearing is used by itself and of 50% when it is used together with mutual credit. These instruments are also relevant from the point of view of risk mitigation for lenders, based in part on the information on individual companies that the mutual credit circuit manager can provide to banks (upon the circuit member’s request) and in part on the relief that liquidity-saving provides especially to NPL companies. The paper concludes by outlining recommendations for how even greater savings could be achieved by including the tax authority as another node in the obligation network. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Economic Advantages of Community Currencies
J. Risk Financial Manag. 2020, 13(11), 271; https://doi.org/10.3390/jrfm13110271 - 03 Nov 2020
Cited by 1 | Viewed by 1256
Abstract
Community currencies are only sometimes economically advantageous. We focus on seasonal changes in money supply and assume that community currencies stabilize the money supply in a local community. This leads to additional transactions during seasons of insufficient supply of national currency. We hypothesize [...] Read more.
Community currencies are only sometimes economically advantageous. We focus on seasonal changes in money supply and assume that community currencies stabilize the money supply in a local community. This leads to additional transactions during seasons of insufficient supply of national currency. We hypothesize community currencies are therefore economically advantageous in a surrounding of seasonally insufficient money supply. We test the hypothesis qualitatively with two case studies, the German Chiemgauer and the Kenyan Sarafu Credit. We find community currencies are only economically advantageous in an environment of insufficient liquidity. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Digital Payments, the Cashless Economy, and Financial Inclusion in the United Arab Emirates: Why Is Everyone Still Transacting in Cash?
J. Risk Financial Manag. 2020, 13(11), 260; https://doi.org/10.3390/jrfm13110260 - 30 Oct 2020
Cited by 5 | Viewed by 3598
Abstract
Since the oil price downturn of 2015, the United Arab Emirates and fellow Gulf Cooperation Council countries have worked hard to expand digital payments in the interest of improved tax and revenue collection, transparency, and security. Yet despite a deep transformation and diversification [...] Read more.
Since the oil price downturn of 2015, the United Arab Emirates and fellow Gulf Cooperation Council countries have worked hard to expand digital payments in the interest of improved tax and revenue collection, transparency, and security. Yet despite a deep transformation and diversification of their payment eco-systems and the formalization of plans to become “cashless economies” modelled on South Korea and Sweden, cash continues to dominate payments in both countries. While industry players typically attribute the prevalence of cash in the region to questions of infrastructure readiness, transaction costs, and cyber-security, this paper finds that plans to expand digital payments at the expense of cash may not be well-adapted to countries with high levels of socio-economic inequality. It proposes a link between socio-economic inequality and use of cash in emerging economies, and concludes that it may be better to not view the relationship between cash and digital payments in binary zero-sum terms, until there is a better understanding of the socio-economic, technological, and policy context in which countries like South Korea and Sweden have managed to reduce their reliance on cash in favor of a diversified digital payments eco-system. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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Article
Black Currency of Middle Ages and Case for Complementary Currency
J. Risk Financial Manag. 2020, 13(6), 114; https://doi.org/10.3390/jrfm13060114 - 03 Jun 2020
Viewed by 980
Abstract
Monetary historians argue that two types of currencies were circulating in the middle ages of Europe. The first was the standard historical form of money made up of gold and silver coins, and the second was a set of small pieces of copper [...] Read more.
Monetary historians argue that two types of currencies were circulating in the middle ages of Europe. The first was the standard historical form of money made up of gold and silver coins, and the second was a set of small pieces of copper and other metallic substances used mainly in towns and townships for local trade as currency. Jetton and tokens are monetized objects that are not official currencies; they were of lower quality of the inferior metallic object, which were used for day-to-day transaction needs. The drive for local monetary decentralization is pointed to build up fiscal autonomy and responsible local monetary institutions. This paper reasons that the monetary regime of the Renaissance was a real and genuine trimetallic currency regime. Full article
(This article belongs to the Special Issue Monetary Plurality and Crisis)
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