Panel Discussion: Financial system of the future

The panel discussion on envisaging alternative financial systems that hosted the speakers: Richard Werner, Christian Kreiss, Lea Steininger and Yeva Nersisyan. It took place at ‘TUtheSky’, an impressive meeting space with a wraparound terrace, with views of the city.

I found Richard Werner’s case for decentralised banks persuasive. He used Germany as an example, a country in which 80% of banks are non-profit community banks. He argued that this mitigates against inflation as growth becomes anchored to ‘real’, more regional productivity, rather than speculation. He suggested this would also enable greater democratisation in the financial sector and lead to a proliferation of small and medium-sized enterprises (SMEs), expanding the role of ‘hidden champions’. Whilst decentralised banks would seemingly allow for more democratic community decision making in the local economy, I am somewhat sceptical of the scale of change this would precipitate and whether it would be in line with the ecological constraints of remaining within 1.5 degrees of warming.

I found Christian Kreiss’ analysis of the financial system most convincing. He discussed the problems associated with financialisaton in more detail than Werner. The deregulation of interest rates, the removal of credit controls and the privatisation of government-owned banks has enabled these ‘agglomeration economies’ to thrive, specialising in high value-added services, from finance to insurance exports. However, this type of growth should be challenged. Indeed, an economy based on debt, speculation and shareholder returns, without being anchored to the production or investment in any real commodities, has created an increasingly hollow and precarious economic eco-system. That being said, the pseudoscientific subtext to his argument made him less convincing: his emphasis on spiritualism as a means to achieve greater levels of morality in the economic system is somewhat questionable.

I found Lea Steinhinger’s responses more ambiguous. She interrogated the ontological origins of money. She used this more theoretical framework as a means to explore the issue of inflation, drawing the conclusion that it is ultimately a social construct. She argued it is only once we come to understand this, we can come up with more creative solutions. Whilst she was advocating for system change, I felt she failed to communicate exactly what this would include. She also advocated policy reforms within the European Central Bank (ECB).

Yeva Nersisyan endorsed Modern Monetary Theory (MTT), a recalibration of our current monetary paradigm. The idea that there is indeed a ‘magic money tree’ is convincing; she emphasised that government expenditure is by no means finite. The only constraint facing us is that of resources: we can’t run out of money, but we can run out of things to buy. She deviated slightly from the ideas of Steinhinger and Kreiss, as her solution constituted merely a new angle on the current monetary system, rather than its complete overhaul. It is in this way, it could be argued she shares the pragmatism of Richard Werner, though certainly not to the same extent.

In spite of being seemingly acrimonious, the discussion was still interesting. The divergence of opinions demonstrated the challenge we are facing to create a coherent and collaborative alternative to the current system.

Based on the public panel discussion on "Financial system of the future" with panelists Lea Steininger, Yeva Nersisyan, Richard Werner and Christian Kreiss during AEMS 2022.
Written by: Katie Coles