Alternatives to the Global Financial Sector: Local Complementary Currencies, LETS, and Time Backed Currencies

Alternatives to the Global Financial Sector: Local Complementary Currencies, LETS, and Time Backed Currencies

Carl Adams (University of Portsmouth, UK) and Simon Mouatt (Southampton Solent University, UK)
Copyright: © 2012 |Pages: 15
DOI: 10.4018/978-1-61350-156-6.ch005

Abstract

This chapter explores complementary currencies and exchange systems and how they can provide some stability and competition to the vulnerability of the financial markets. The social economy, or 3rd sector, already plays a significant part in many societies. This is becoming more so as many governments and nations are facing decades of debt inevitably resulting in cut backs in key social and health services. In addition, the existing formal economic activity does not capture, value or support the full range of social and economic interaction within a nation. The chapter examines timebank systems, a particular type of complementary currencies and exchange system, and provides guidance on issues to consider in develop them. One of the finding from the evaluation is that as the number of people in the timebank system increases then more formality is needed to moderate the system and reduce potential for misuse.
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Non-Banks And Their Role In The Banking Sector

The banking sector seems to be in a very dominant position controlling markets and dictating the direction of innovation in the financial sector. However, this dominance may not be as assured as first thought: Non-banks are playing an increasingly significant role in the financial world and are involved in all aspects of financial systems (Mouatt & Adams, 2010; Adams & Mouatt, 2010). For instance, Bradford et al (2002) examined the roles that non-banks play in payment activity and identified that:-

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    Non-banks are involved in a myriad of activities and roles, both in traditional and emerging payments types;

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    Non-bank business relationships with banks and other participants in the payments systems are often highly complex and interrelated;

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    Non-banks are rarely directly involved in settlement activities and, hence, appear to be associated with limited settlement and systemic risk;

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    Both non-banks and banks appear to be increasingly susceptible to operational risk factors.

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