Good banks and meaningful money today in France

While I’m very interested in the future of money, I’m even more interested in the future of money now: the very practical things that we can do with the banking and monetary system as it is today.

I have come to realize that the ideas I believe about the future of money, in particular making money more meaningful, are very well understood by small community banks and credit unions. They have incredible assets, one of which is the human-sized organization, which allows you to quickly talk directly to the decision-maker. What they lack are simply the resources of the large banks and the sense of urgency of startups, but I know they are open to partnerships to workaround these issues.

Below is my corrected Google translation of a recent post by JCPhilippe, who is Managing Director of the Credit Agricole in the region of Pyrénées Gascogne in France on how the bank he manages is becoming a good bank.

As part of  a week on “socially responsible savings”, we organized a symposium on 3 November. Distinguished guests, Father Bernard Devert,President and founder of Habitat Humanism , François De Witt,founder of Finansol , and Pierre Scherek, Director General of Ideam convinced us of the usefulness of their actions and this form of savings, still limited in use in France. Socially responsible savings consists in selecting financial investments by adding meaning and socially responsible as a requirement in addition to performance.

We fully support this approach. When I say this, I understand it is difficult to believe a banker is telling the truth. If he speaks of social responsibility, ethics, faithfulness to pledges, and sustainable development, how can we not think that he is only doing so to better profit? The mega-banks have left such a strong mark in people’s mind for their subprime profits, losses, their traders and their bonuses, that it is easy to forget the local bank dedicated to a particular geographical area, which serves, people of modest means, small businesses , artisans, shopkeepers, farmers. The headlines make us forget that finance and banking are first and foremost here to help with daily life. So when a banker says: “I want to be useful!”, Who can believe him? Who can believe that a bank, a banker can have be well-intentioned?

A Pyrenees Gascogne, we believe in the good and useful bank, local solidarity, local cooperations. This idea of a good bank can be seen in everything we do. When we say that advisers are not paid on the products they sell, it’s true, or that we advise our customers products that suit them, it’s true. And because we want a good bank that we have developed a consulting business in how to save energy. And when we provide help to non-profit in our area, it’s because we believe their action is vital to the social fabric.

So if we offer our customers financial products around solidarity and socially responsible investing ( here on the site talking about heritage ), it’s because Pyrenees Gascogne invests itself in these products, it’s because these products are purchased by our employees employee for their own savings, it’s because we believe in the value of these investments for ourselves. We do not follow fashion, we are not trying to conquer a market, we try instead to share a belief with our customers.

I am increasingly convinced that of of the key levers to make companies more virtuous, more accountable to the future is to channel savings into those companies that subscribe to the principles of sustainable development, and integrate this philosophy in their decision and accounting. It is more useful to invest in such investments than to give a little to non-profits, (although each donation is helpful) because that way, they have means to improve their ambitions. We can put more solidarity in the economy and the formula of Phocion “private virtues become public morals” is truer than ever. Of course, we must still dare to believe and decide to build!

Study finds that shopping near you is better for you

In May 2007, Civil Economics, an economics research company specialized in sustainable prosperity has issued a research note titled San Francisco Retail Diversity Study (Full Study
Executive Summary
Talking Points).

The main conclusion of the study is that

A 10% shift in consumer spending, from chains and internet to locally owned retail, would create nearly 1300 new jobs and over $190 million in increased economic output for San Francisco. Consumers don’t have to spend more, just spend differently.

Guillaume here: something not mentioned in the analysis is that more jobs and more economic output in a specific geography where you own a house means that your house increases in value (or keeps its value or decreases relatively less). In other words, by collectively chasing deals online and saving $100 in Christmas gifts, a neighborhood may be actually be contributing to a decrease in their wealth. It would be nice if the money system was making this link more obvious.

Anyway, it seems that Association of Alternative Newsweeklies heard about this study and launched a national campaign that

urges their readers to spend at least $100 of their holiday money this fall at locally owned stores in their communities – a move that could pump more than $2.9 billion into urban economies during this recession-plagued season.

(full press release).

In the Portrero neighborhood of San Francisco, local merchants have adapted the campaign into a drawing of lots for a prize whereby people can “buy” tickets for the chance to win gift certificates from local merchants by sending an email with a pledge to spend $100 locally.

Here is an example of the emails circulating.

The Potrero merchants are running a promotion, giving away $1000 worth of
gift certificates to locally-owned, independent businesses. The drawing is
this Thursday; all you have to do to enter to win is to pledge that $100 of
your holiday spending stays here in the neighborhood, with locally-owned

Send an email saying “I pledge” to and you are
entered into the drawing. Someone will win $500 worth of goods and
services, and thanks to local merchants, there will be two 2nd prizes: $250
worth of goods and services.

So… think about redirecting just $100 that you might have spent at, or Macy’s, or on Starbucks gift cards. And help the local
economy — find out more at

And please — forward this to others you know who live and work in Potrero
and Dogpatch. OK sure, it will slightly reduce your chances of winning the
drawing, but it’s great for people to learn more about our local

Portrero Buy Local campaign

Guillaume here: I think this is a great step towards local community currencies. I think I would have liked the Portrero Merchant association to go a step further and let merchants issue merchant branded “Portrero Bucks” that merchants would have sold for real US dollars, with say $100 “Portrero Bucks” for $90 U.S. dollars. These would have acted as a guarantee for the pledge, and would have been a first step towards the creation of an actual community currency.

Energy independence and currency sustainability

Chris Skinner just posted a new post on “Social Money” in which he writes about the challenges of online currencies or real-life complementary currencies. I commented at length and making a connection between currency independence and money independence.

Money is fundamentally social. Which is why the social Web can be expected to impact banking/payments much more than it has so far operationally. I personally view the monetary system we live in today as a sort of AOL of money where one central organization and its affiliates have effectively a monopole on what is money and how it is created. I think that at the time of AOL, people had a difficult time imagining what an open, decentralized and resilient AOL would be, and how much it would force them to transform. Today, in my opinion, we are in the early days of this new decentralized money. We haven’t figure it’s version of HTTP, HTML, browser, SSL and DNS yet, that’s all.

With regards to runs on communities’ money. I think it makes it very clear that an independent community with an independent currency should seek not just a 0 or positive balance of payments, but a balanced current account. As Paul Volcker (I think) said: “Trade matters”. The strength of a currency in other words depend on the resilience on the local economy to outside events. In the real world, free trade ideology and negligence of deficits has already cost some real countries dearly (Iceland) and many other countries including the US are at risk.

With regards to adoption of community currency, I would argue that it is not just a problem of trust. The success of real-life currency is not because people necessarily trust them. It is primarily because demand for it is created by making it the only to pay for tax debts. One way to create demand for a currency is to have local businesses (i.e. org/people with public reputation) issue it and have community member agrees that the non-profit community service entities get their donations only in this currency.

Money system as architecture and other insightful metaphors

Video recording of J-F Noubel talk on the Future of Money

In April 2008, Jean-François Noubel gave a talk on the Future of Money in Paris. If you understand French, are not familiar with money and want to sit and relax and learn about it, I highly recommend watching this video. I hope this will be eye-opening for you.

For non-French speakers and those already familiar with money, I want to share some of my notes as I think J-F Noubel found excellent metaphors to explain complex concepts:

  • Money is an invisible architecture. An architecture is something human designed that defines the rules on how the components of a system relate to accomplish the system’s purpose. Inevitably in software development, the architecture of the system influences how software developers contribute to the system, leading them to good and poor division of work and determining speed of development, maintenance and execution. A monetary system is very similar to a software architecture in the sense that a monetary system is fundamentally an information system, which relate to establishing value and tracking exchanges, with very precise rules defined and refined over time by humans. It is invisible because we’ve got so familiar with it that it’s like air we breathe.
  • Our current monetary system is like the Monopoly game: there are only losers. Just like the game of Monopoly and many natural phenomenon, our monetary system obeys the Pareto law of self-aggregation: 20% of the population own 80% of the wealth, 250 individuals own 60% of the World’s wealth. This is because money attracts money: the more you have it, the easier it is to make more. Just like in Monopoly the winner takes it all, and as a result cannot play with the other players who lost, so he lost as well. Just like we could change the rules of Monopoly to make it impossible for a winner to take it all, we could change the rules of our monetary system to make sure distribution of wealth is more equal.
  • Money is like water, and the money system is like an irrigation system in a garden. You don’t want your water to end up in one spot, but distribute it equitably in the way that maximizes the fruits, beauty, diversity and long-term health of your garden. This metaphor is particularly relevant as “currency” comes from current, so etymologically money is the thing that flows between us.
  • Money influences our culture (society) just like water influences our culture (garden). Our current monetary system forces us into competition and extreme optimization of processes making our overall society less resilient to shocks. No only do we depend more than ever on each other, but as we optimize we end up in a monoculture. It’s like having one giant field of genetically modified corn, instead of a lot of small fields, each with a different variety. Not optimized, but much more resilient to a pandemic.

Here is a link I found where some of these metaphors are also discussed.

The Future of Money conference

Jean-François Noubel is organizing the conference The Future of Money on November 26th from 7pm to 10pm in Mexico City.

Our conventional monetary system will not last long. This prediction is shared by almost every economist today: debt-based and interest-based money is an unstable system that is condemned to die from intrinsic congenital imbalance (for instance the market cannot follow the speed of interest-based debt to pay back). No one knows precisely when the big collapse is to be expected, but everyone agrees it will happen sooner than later. The current world wide monetary crisis, as well as the effects of monetary concentration, are one of those historic social alerts announcing the big crunch.

What no one anticipates is that money is about to follow the same path the media followed during the past years; from controlled ownership of media with one-way top down broadcast systems, to peer-to-peer, participatory, open publishing. Millions of free currencies will soon circulate on the Net and through our cell phones. They will not be controlled by states or central banks, they will be issued and used by millions of marketplaces willing to free themselves from conventional debt-based, interest-based money (85% to 95% of money circulating today). Everyone will use these free currencies simply because they will be ubiquitous, easy to integrate into current media technologies, and because most people and organizations are undermonetized.

This new paradigm is likely to turn the current monetary system into a completely obsolete system. The next one will offer marketplaces the capacity to maximize their trade potential with the ever right amount of monetary mass at their disposal.

Hat tip to @JCCapelli