In modern economic systems money plays a fundamental role. Despite this pre-eminent role, providing a definition of money is not an easy task.
Why to democratize the money? Democratizing the money means allowing everyone to be an active part of the society he/she belongs to.
The first step towards a democratization of money is to ensure equal opportunities for all to own property and thus full participation in the democratic governance of society.
The second step in the same direction should imply equal access to the credit system. It is clear that to set such an ambitious goal on the verge of a global crisis, leads to the need of finding a set of proper tools.
This project is based on the idea that the money as we know it, cannot be the suitable instrument to be use in a process of democratization as stressed above. Our aim is to investigate whether cryptocurrencies, can be employed in the process of democratizing money.
In the last decade, a multitude of digital coins and means of payment has emerged thanks to technological innovations. At present, it is not yet clear whether these tools will be able to generate a systemic improvement. For that reason, the aim of this project is to investigate how the use of these tools can determine welfare improvements and trigger a process of financial democratization.
The innovative elements that support this project come mainly from the interdisciplinarity stemming from the collaboration between economists and economic.
At the moment, we identify two areas of analysis in which we foresee the possibility that the use of cryptocurrencies could improve systemic efficiency and trigger a democratization process of the financial system:
1. Monetary policy;
2. Multilateral trade credit circuits.
As regards monetary policy, central banks around the world have adopted unconventional tools over the past decade in response to the 2007 financial crisis. Even the recent crisis triggered by the Covid-19 pandemic has prompted the Federal Reserve and the Bank of England to employ unconventional policies such as helicopter money or direct monetization (for an overview on monetization, Turner 2015). One of the biggest problems in the implementation of policies such as helicopter money is mainly in the way of transferring resources from central banks to households and businesses (e.g., not all citizens have a bank account). Cryptocurrencies could easily overcome this kind of problems. Indeed, it could be possible to plan crediting a certain value of cryptocurrency through the use of a virtual wallet usable on smartphones; such cryptocurrency would clearly not have legal value as the national currency, but it could be used by the population to buy basic goods and services (a sort of Universal Basic Income). Clearly the State, to encourage the acceptance of such a cryptocurrency, should guarantee the possibility to pay at least part of the taxes in this new cryptocurrency.
Crytpocurrencies can also be used for the resolution of the structural imbalances of the eurozone and of international monetary system. Kregel (2019) emphasizes as a European Clearing House, operating in a cryptocurrency parallel to the official currency, could work in a way similar to the International Clearing Union proposed by Keynes at Bretton Woods (Keynes, 2011). Kregel's proposal is very similar to the one presented in Fantacci and Papetti (2013): they propose to create a new source of funding, inspired by the Clearing Union of Keynes, intended to facilitate the reabsorption of these imbalances and the financing of the real economy at the ECB.
As regards multilateral credit circuits, the Keynesian principle of using the clearing tool to facilitate payments by eliminating the cost of liquidity, can be applied with excellent results also at firm level. In the real market, it is not uncommon for companies to give credit to each other in the form of a deferred payment; this option is usually referred to as trade credit and is quite widespread. Hence, a new source of financing emerges between suppliers and customers which departs from the traditional ones, i.e. the banking system and the capital market (for an overview see Seifert et al., 2013). According to Fabbri and Klapper (2008) the companies which grant trade credit are often the same which benefit from it from their suppliers. The matching of incoming to outgoing financial flows is indicative of the companies¿ intention to balance assets and liabilities. This intention can be considered as an informal step towards multilateral clearing which is the core of the functioning of clearing circuits such as Wir and Sardex (Stodder and Lietaer 2016, Lucarelli and Gobbi 2016).
We are within an epochal revolution, if this revolution will lead to a greater democratization of the financial system to date is not clear. The aim of our research is to broaden knowledge with respect to recent dynamics and possible future scenarios in these areas.
REFERENCES
Fabbri, D. and Klapper, L. F. (2008). Market Power and the Matching of Trade Credit Terms. World Bank Policy Research Working Paper, n. 4754.
Fantacci, L. and Papetti, A. (2013). Il debito dell¿Europa con se stessa. Analisi e riforma della governance europea di fronte alla crisi, Costituzionalismo.it, Fascicolo 2.
Keynes, J. M. (2011). Eutopia. Proposte per una moneta internazionale, Et al. edizioni.
Kregel, J. (2019). Alcune osservazioni sulla globalizzazione della finanza e delle valute digitali, Moneta e Credito, 72: 15-28.
Lucarelli, S. and Gobbi, L. (2016). Local Clearing Unions as Stabilizers of Local Economic Systems, Cambridge Journal of Economics, 40:1397-1420.
Seifert, D, Seifert, R.W. and Protopappa-Sieke, M. (2013). A Review of Trade Credit Literature: Opportunities for Research in Operations. European Journal of Operational Research, 231:245-256.
Stodder, J. and Lietaer, B. (2016). The Macro-Stability of Swiss WIR-Bank Credits: Balance, Velocity, and Leverage, Comparative Economic Studies, 58: 570¿605.
Turner, A. (2015). The Case for Monetary Finance ¿ An Essentially Political Issue. Available at: https:// www.imf.org/external/np/res/seminars/2015/arc/pdf/adair.pdf