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2021 | Book

Financing Our Future

Unveiling a Parallel Digital Currency System to Fund the SDGs and the Common Good

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About this book

The monetary system is the indispensable missing link in the debate of sustainability, and whether the current financial system can handle these evolved needs. To date, the UN Sustainable Development Goals (SDGs) primarily have been financed either through the private sector, through conventional public sector taxes and fees, or through philanthropic commitment. Assuming a need of 4 to 5 trillion dollars annually in the 10 to 15 years left to finance our future, these conventional sources of finance are insufficient in terms of both the scale and speed of funding required to finance our future. Furthermore, the inherent instability of our financial system forces the world community to focus first and foremost on repairing and stabilizing the existing system.

The development of cryptocurrencies using distributed ledger technologies (mainly blockchain) has prompted leading central banks to study the potential application of this approach to independently create purchasing power. In this vein, this book offers a new approach, namely introducing a parallel electronic currency specifically designed to finance global common goods and provide the resources necessary to achieve the SDGs. Furthermore, this mechanism would have a stabilizing effect on the existing monetary system.

The book argues that one way this could be achieved is by giving central banks a modified monetary mandate to inject new liquidity into the system using a top-down approach. Alternatively, liquidity could come from corporate or communal initiatives with crypto- or communal currencies in a bottom-up approach. The author maintains that by issuing a blockchain-enabled parallel electronic currency earmarked for SDG-related projects and using other channels for monetary flow rather than the conventional ones, the future could be financed in a different manner. In the long run, abandoning our current monetary monoculture and introducing a monetary ecosystem would stabilize international financial markets, increase monetary regulatory efforts, reduce negative externalities, create a social Pareto optimum and stabilize democracies. This book presents, in the same spirit as Fritjof Capra’s The Tao of Physics, a Tao of finance—an outside-of-the-box approach to financing global common goods.

Table of Contents

Frontmatter
Chapter 1. A New Narrative for the Anthropocene Era: On Boundaries, Interconnectedness and the Global Commons
Abstract
Imagine a mechanism, a thought process, a collective behavior or a social invention with the potential to overcome absolute poverty within 18 months. One that leads to the protection of biodiversity, halts global warming, reduces water depletion, and mitigates fraud and illicit financial transactions, while simultaneously expanding school education, increasing access to health care and fostering global peace—all in one. Imagine this process being expedited through democratic channels more quickly and easily than through a lengthy global governance approval process; imagine it starting in less than six months with fewer than 250 staff. Imagine a mechanism that enables billions and billions of human beings on this planet to sustain themselves and their neighborhoods and take better care of the environment—all at once and all the time.
Stefan Brunnhuber
Chapter 2. Beyond the Mantra of Traditional Finance: Significance and Limits of the Conventional Approach
Abstract
Modern finance has profoundly influenced almost all aspects of human society and every aspect of our personal lives. To some extent it has become the basis of all economic decisions and investment strategies, social and ecological programs and even political decisions. Combined with new technologies, finance has become both the single most beneficial and the single most detrimental factor affecting the planet and our future. The 2008 crisis in particular revealed unanticipated but significant limitations to our financial system, which prevent us from better understanding and steering finance for the benefit of humanity and our planet. These limitations are most evident where global commons are concerned. One of them is the idea of the rational market and its agents as possessing a utility-maximizing function.
Stefan Brunnhuber
Chapter 3. Western Thinking at Its Best: Systems Theory and Psychology
Abstract
Our financial system has been analyzed, dissected and examined through many lenses. However, two major contributions of Western thinking—systems theory and the field of psychology—have not featured prominently in these analyses. In this chapter, we will first try to answer the following questions: firstly, what are the components required to make a system more sustainable? And secondly, how can we better deal with the unknown, with uncertainty and complexity? Nature serves as our example: living systems have an astonishing capacity to stay within a window of viability over extraordinarily long periods of time. This chapter will demonstrate that beyond the various schools of economics and finance, systems theory can provide a more comprehensive approach. Besides systems theory, findings in psychology and neuroscience then help to support the idea that humans have the capacity to access and operate within two systems simultaneously. This is because we have two cerebral hemispheres that represent two different ways of interacting with our environment. This dual capacity of the brain and of the mind is reminiscent of the Yin and Yang of Taoism. In conclusion, we will refer to six components that can help us to change our behavior on a personal level.
Stefan Brunnhuber
Chapter 4. Unleashing the Sleeping Giant: Discovering New Ground and Starting the Dance of the TAO
Abstract
In Chap. 2, we explored the conventional way of financing social and ecological challenges and introduced the notion of a “six-pack” of tools. This included regulatory efforts (transparency, taxation, taxonomy), impact funding, hybrid ex-swap strategies, and public-private partnership initiatives to tackle an unstable financial system. We also provided a rationale for why and how to redistribute money. In Chap. 3, we saw that systems theory offers a different perspective in which the optimum of any sustainable pathway lies in between efficiency and resilience, in the “anti-fragile zone” of a given system. Additionally, we elaborated upon the full mental capacity of the human brain and mind, distinguishing between linear and parallel thinking. Using this dual perspective, the present chapter analyzes the aspects of our current financial system that prevent us from creating the liquidity to finance our future. Using the SDGs as a benchmark plan, we estimate the required amount of additional liquidity needed to finance these goals. Lastly, we describe the alternative and complementary mechanism of parallel currencies to circumvent these limitations. However, our discovery of this new ground needs to begin with a better understanding of the global commons.
Stefan Brunnhuber
Chapter 5. The Tao of Finance: A Social Invention That Can Change the World
Abstract
Humans’ perception of money often is like a fish’s perception of water. Fish see water as neutral, unchangeable, like a natural law. Similarly, many of us consider money a neutral element that enables our individual desires and societal goals. Money is seen to be like a thermometer: we insert it into water and it simply measures the temperature. But money is not neutral. If we want to understand the nature of water, we need first to step out of the it, then examine it. The same is true of the monetary system. Only by distancing ourselves from it do we become able to see that the monetary system in its current unbalanced form forces us onto a non-sustainable path: it enhances income and wealth disparity, pushes us onto a forced growth trajectory, and is intrinsically unstable, favoring short-term private yields. This system acts in a mainly pro-cyclical manner and exacerbates anxiety, greed, and competition while reducing social capital such as trust and solidarity. And despite advanced new technologies and well-intended individual lifestyle changes, the monetary system prevents us from achieving a more sound, stable and sustainable future. In consequence, more of the same simply will generate more of these unwanted, one-sided and unbalanced results—over and over again.
Stefan Brunnhuber
Chapter 6. New Symmetries: The Future Has a History or a Path with a Heart
Abstract
We started this book by introducing the concept of TAO to illustrate a new way of thinking, perceiving and acting in this world, and have tried to apply this to the financial sector and in particular to the problem of financing global common goods as embodied by the UN SDGs. The incentive for this new thinking derives from the fact that we now are living in the Anthropocene. Humanity is in the driver’s seat, determining both our own future and that of the planet. A paradigm shift is taking place. The philosopher Thomas Kuhn describes a paradigm shift as a situation in which irregularities and anomalies that cannot explained be within a given paradigm occur with increasing frequency. Responding to such a situation requires two major changes: a change in mindset and a change in the modus operandi. In this text, the old paradigm is the monetary monoculture, with its pervasively linear and sequential thinking. The new paradigm is a complementary monetary system that involves both linear and parallel thought processes. Operating with this new paradigm will allow us to manage anomalies and irregularities such as the widening of the income and wealth gap, increased ecological damage, and large-scale economic migration through different monetary pathways.
Stefan Brunnhuber
7. Correction to: Financing Our Future
Stefan Brunnhuber
Backmatter
Metadata
Title
Financing Our Future
Author
Prof. Dr. Dr. Stefan Brunnhuber
Copyright Year
2021
Electronic ISBN
978-3-030-64826-8
Print ISBN
978-3-030-64825-1
DOI
https://doi.org/10.1007/978-3-030-64826-8

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