The Financial System of the Future: A Panel Discussion with B. Lietaer, C. Felber & B. J. Krouwel

Aug 10, 2017 by

by Aishwarya Krishnan and Francini Van Staden

Under the facilitation of Helga Kromb-Kolb, the three panel speakers, Christian Felber, Bart Jan Krouwel and Bernard Lietaer engaged in a discussion about the flaws in the existing financial system, the future of the financial system and changes that they envision in the coming times. The speakers had commonalities in their viewpoints and perspectives, but deviated in what they highlighted in the discussion. They discussed perspectives on the changes that are needed, and the panel discussion closed with a personal take-home message from each of the speakers.

Dr. Kromb-Kolb asked the panel to discuss the flaws in the current monetary system. The following is a summary of the discussion, with each panel member motivating what they considered critical flaws of the system:

Bernard Lietaer began by highlighting the current monoculture and the monopoly of a single currency within the global economy as a structural reason for system instability; a fact that was accepted by all the panel speakers. He went on to add that the present system amplifies the business cycle, one that is predominantly driven by self-perceived interest. The inherent short-termism established in the current monetary system concentrates wealth to the top 10% of the system. Consequently, the system is seen undermining social capital and this is made worse by competition among the users.

Bart Jan Krouwel with his past experience in co-operative banks discussed the lack of acceptance of social responsibility in managing money within the current banking system. Technical thinking overpowers societal thinking, which is virtually absent, from key players within the system. A systematic flaw highlighted and agreed upon was that the current policies are geared towards mainstream growth which helps concentrate wealth and has detrimental effects on the community as well as the environment. The banking system must instead support smaller and innovative activities.

Christian Felber began his discussion by highlighted the lack of democracy as a major flaw in the current financial system. He states that a democracy is missing, not only in the design but also in the participation, in the financial system due to the presumption that the system regulates itself. He adds that there is a total lack for a democratic mandate for central banks; another aspect agreed upon by all the panelists. He revisited the fact that the system is for-profit orientated, and not for-public, or for the common good. It essentially acts as a “financial weapon of mass destruction”, as stated by Felber. The current system literally has no limits to inequality and is driven into further disparity through a positive feedback mechanism. On a side note, he expressed concerns of the challenges caused by not financing the sovereign debt directly by the country were highlighted.

Building on these flaws, Helga Kromb-Kolb asked three participants to put together cornerstones, for a new financial system. Three cornerstones were collectively agreed on:

  1. Banks should be real co-operatives owned by the members of the community, and not the shareholders. The owners of the money should make decisions and should have the governance over the system.
  2. Currency diversity in which technology is used to assist should be a means and not a goal of development. There must also be a diversity of institutions that create money.. Diversity was described as critical as it supports systemic democracy and resilience against crisis and avoids lack of social cohesion due to its roots within the culture of the region.
  3. The governance of monetary systems and currencies should be democratic, and towards goals as defined by the sovereign society. System mechanisms should be submitted to a ‘common good’ or public good evaluation, as defined by the sovereign society that should shift from being ‘intelligent speculators’ to active participants.

As a take-home message, Felber began by sharing the idea that fair trade, ethical credit assessment, impact assessment and social considerations should be the rule for investment and other financial decisions; not the exception. We, as a society, should not encourage the illusion that transformation can happen in isolation of the many stakeholders that make up the system. Krouwel spoke optimistically about change that is driven by the younger generation. But he urged that changing the financial sector means a fundamental change of individual financial leaders’ values that drive financial behaviour. Lietaer closed by saying that as is always the case with change, there comes a mixture of positive and negative expectations and results. The key turning point is that we have to learn from the system failures and system mistakes and take an active hand in driving the change we wish to see within the system.