Money and monetary policy in global economy.

Money is defined as a socially acceptable means of trading and exchanging goods and services as well as a measure of economic value. Of course, citizens never been asked if they accept this instrument and its use, which is just imposed and eventually forced to accept it as an indisputable social institution. We are born into a monetary society which we consider "natural" and simply imitating others to accept it without ever wondering if a non-monetary society would be much better than this. Fascinated usually from our early age by the power of money, we quickly worship and serve it faithfully, hoping to become one of the powerful of this earth someday in order to enjoy it as much as we want. Its capacity to be accumulated without any social limitation to arbitrarily large amounts, makes it seems deceptively in our eyes as a means of "freedom". But its upper levels are tightly closed to any enchanted climber as capable, ruthless and atrocious he can be. The system itself is structured so that the existing power can only increase and never to be shared.
Bernard Lietaer, designer of EU monetary system agrees with us that greed and competition along with the fear of lack are continually created and reinforced by the monetary system we use. We can produce more than enough food to feed everyone but not enough money to pay all of them. Lack is located within our own national currencies. In fact, the central banks task is to create and maintain this currency scarcity. A billion people are starving today on earth, although we can produce enough food for everyone. On the other hand, international agencies hypocritically preach they are diligently working to eliminate world poverty they deliberately are creating. The monetary economy prevails in the world today with the profit always to arise over the quality of life, and everything which does not have a market value simply does not exist. The "profit motive" the current economic system dispays infects everyone, employers and employees, all thrown into the social arena to fight with hatred against each other for a better position in monetary pyramid. 
Monetary system is a set of policy lines determined by financial institutions for the market system and there are only two things one should know about the monetary system:
* The first is the fractional reserve system, wherewith the banks are printing money out of thin air.
* And the second is that all the money are generated by compound interest. When you borrow money, you have to return more than you borrowed, which means that you recreate money which must be maintained by creating more money. We live in an infinite growth model.
The consequences of all these is inevitably inflation and bankruptcy. As for bankruptcy, it comes in the form of economic collapse because of debt. And when it comes to debt, you know what takes place. Trade! Actually buy and sell debt for profit.

Resource Based Economy.
The only economic model with real value.

The implementation of such an economic and social model is completely feasible if the existing technology stops serving commercial profit and begins to serve citizens. All that is needed are the municipality’s physical resources and a development model for the efficient production and distribution of money the sales of products provide. Today, the natural abundance of our planet is controlled and strangled by corporate interests. The existing monetary system in the way it works today, constitutes a hindrance to the development of science, technology and human culture, which are aiming at universal welfare. Nowadays, there is the ultimate degeneration of monetary system, resulting in degeneration of human society. In Resources Based Economy model, money is a complementary tool and not a predominant one. The purpose of this economy is the complete replacement of national currency as the official exchange means in local society. In this type of economic model what really has value are the available natural resources and not the money. Moreover, the objective of money is to provide access to natural resources. But the most important condition in order to achieve such a systemic change, is the change of political culture for the benefit of the whole society as well as politicians rejection of their special privileges for the benefit of people.

Monetary monopoly gives birth to crises.
Municipal currency, a parallel social currency. 

At first, why should anyone be positive to accept a local currency? The question is how can local currencies align themselves with the financial self-interest and according to this, we have to see the local currency within a larger economic context. Municipalities around the world are facing severe cuts in their budgets. Since the currency transactions will continue to be essential economic functions, many municipalities proceed to the adoption of "local currencies" in order to boost local financial and monetary autonomy. Local currencies caused the expected hostility of central authorities which are staring their official currencies to get "useless” in local societies, and their exchange rate to be 1:1 with the local currency in each country local currency has been introduced so far. The local currency does not affect the exchange rate of the official currency at international level, nor the monetary policy of the Central Bank, as well as it is not about to become national currency by itself and occupy the operating framework of the official currency in markets.
Because of the apparent reluctance of government to support local currency, it is not so easy to convert it in official currency (dollars or euros), and businesses are much less willingful to accept it. The key to success for the application is located in the convertibility of local currency to the official currency of the state. This is because local companies depend on global supply chains for the procurement of supplies and raw materials, supply chains which want to be paid in the official currency of the country. In principle, the difficulty of convertibility is limiting local currency’s impact on the local economy. But this problem can be solved by creating "official currency bank reserves" which derive by the income of profitable municipal enterprises that sell their products in official currency. Therefore, a municipal bank creates a reserve in official currency that acts as a safety net in the process of monetary conversion. This is the key to success that guarantees easy conversion of the local currency to the official one with a commission of five percent (5%). So, the merchants and citizens accept the local currency with ease, as the additional liquidity in a family worths the loss of only 5% value.
This means that while the nominal value of the local coin is 1:1, when someone makes financial transactions with a professional who participates in the local currency program as a member of its network, local currency’s purchasing value is 0.95. Municipal currency creates an economic model that can be applied when the next crisis breaks out and introduces a new logic, a new model, solving the financial liquidity problems which stop the local development. Consequently, businesses affiliated to networks and the use of local currencies are more competitive, as they offer greater liquidity and enhance the local or sectoral market, developing greater activity and covering much more easily the most inelastic expenses such as taxes, levies, payrolls etc., anyone needs to pay in official currency. The local currency in four features as hereunder:
* It has a lower interest rate than the official currency.
* It is not aiming to profit accumulation since 3% of its 5% surplus is generally invested on tasks of public benefit in community’s activities network while the remaining 2% acts as a reserve, giving incentive for the exchange of the official currency to the local one.
* It exploits more efficiently the existing production resources and comparative advantages of the region.
* A coupon (paper money) is valid for 6 months. After its expiration it must be exchanged with a new one. This limitation restricts the phenomena of accumulation and speculative frenzy. 

Creation of Municipal Development Bank.
Why Municipal Development Bank is founded. 

The creation of this bank will consist a "special fund" which will support the development plans of the municipality by directing the flow of capitals to municipal and private enterprises inside the social entrepreneurship network. Municipal Development Bank will be one of the main pillars of municipality's new development model, promoting new financial engineering tools by facilitating access of local businesses to them, to make them competitive. It is the answer of municipality to:
* The credit suffocation of enterprises.
* The expensive loans which affect all enterprises with high interest rates and excessive collateral requirements.
* And the most important once we are heading mathematically to the total bankruptcy and collapse of the world monetary system which will isolate countries from every kind of business activities, Municipal Development Bank will be the protection shield that would guarantee a sustainable development of municipality and the social entrepreneurship network in the hard times of monetary crisis.

The creation of Municipal Development Bank guarantees the financial autonomy of the municipality. Monetary independence on the other hand is a key part of political sovereignty. The aim of this financial institution is to improve the allocation of municipal resources for the support of local development models. The creation of bank’s "initial reserve" takes place exclusively by the proceeds of profitable municipal enterprises rather than the annual budget of the municipality. The idea of using “free banking” to produce alternative currency allows a region affected by the economic crisis to recover, giving a trading platform to buy services and products locally. Fractional Reserve Banking (FRB) model is applied, and according to this the bank does not hold all deposits of its customers but a part of these are given as loans to other citizens. 
This means that the available funds (bank reserves) is only a fraction (known as "reserve ratio") of the total deposits amount in the bank. The fractional reserve banking increases money supply and since the bank creates new money, it essentially replaces the official currency in a local level. The fractional reserve banking is the most common form of banking system and operates in almost all countries. It combines the coupon (paper money) and plastic money (credit and debit cards) with bank accounts system in local money. The main products of the Municipal Development Bank are as follows:
* Business loans for the purchase of raw materials and supplies.
* Municipal Development Bank cards which are used to meet the basic needs of all citizens.
Beneficiaries of the above banking products are all citizens of municipality’s regions as well as firms which enrolled themselves in municipal financial network.

Legal and Financial framework.
Formula 60/40.

The proposed formula is simple and it is applicable internationally in social economy. The municipality implements its development master plan with initial capital provided by investors funds active in social economy and becomes the exclusive owner of the industrial infrastructure. Through the Municipal Development Bank, which is designated as lead manager of this municipal property, it is granted the exploitation of industrial infrastructures to social enterprises founded by groups of urban farmers. Social enterprises undertake the responsibility for the operation of selected production units, and via the "social payback term”, they return to municipal credit 60% of their net profit, which will be used to support the municipal development model. The remaining 40% of the net profit belonging to the social enterprise is distributed as follows: 
* 5% is incorporated to its funds as a reserve. 
* 35% is distributed to its employees as a bonus. 

Liquidity and new social financing tools.
Social Investments Package.

Funding is no longer the privileged place of traditional banks. All international and European organizations recognize the importance of social banking to support actions with visible, positive, and measurable social, ethical or environmental parameters. Next to conventional banks, social and investment banks arise which offer preferential financing to social economy projects, obeying to an alternative interest rate policy, orientated to a positive social impact rather than profit maximization. At the same time, public subsidies cease to be the only tool for financing innovation and sustainability. There is available capital in the international market and in emerging economic areas which focus on pursuing ethical, social or environmental benefits. We should urgently consider opening credit lines for social investments, ie investments in which social benefits are measurable and sustainable. A whole group of new tools, methodologies, approaches and metrics are used for starting and developing a new market, taking into account not only the gains but the society, the environment and the economy as a whole. By creating an innovative mix with private participation, ie social funding from private sources by providing repayable funds, we enhance the multiplier of certain public development purposes, resulting in social benefits and the investment's profit. The new banking tools use social funds (socially responsible mutual funds) of development nature (growth funds) with the following formula: 
Social impact investments broadly defined as a group of financial resources needed for the reinforcement of social change or by another terminology "money mixing of economic and social benefit". By the adoption of Social Impact Bond (SIB), credit institutions could have access to this social capital stock and private investors from abroad could facilitate their entry into the domestic market under binding social conditions. The social impact investments are clearly connected and interact with social innovation. Social innovation can be a product, a production, a process or technology, but can also be a value, an idea, law, a social movement, an intervention or some combination of the above.
Development Impact Bond (DIB) is a performance-based investment instrument intended to finance development programmes in low resource countries, which are built off the model of Social Impact Bond (SIB) model. Based on the SIB model, a DIB creates a contract between private investors and donors or governments who have agreed upon a shared development goal. Investors advance fund development programmes with financial returns linked to verified development goals.