Ensure the Financial Sector Serves the Real Economy

Ensure the Financial Sector Serves the Real Economy Ensure the Financial Sector Serves the Real Economy

New financial instruments to be tested according to the precautionary principle before they are allowed to be sold as legally enforceable contracts.

The financial and banking sector has become increasingly disconnected from the real wealth-producing economy. Rather than serving, finance has been diverted to purely speculative purposes, which may as well be labelled gambling. As such activities have become more profitable, and seen as a less risky option than providing credit for entrepreneurs, many have forgotten that we cannot in fact eat money.

For many countries, gambling debts used to be legally unenforceable as pure bets on future prices rather than hedging to protect against price fluctuations on real assets (e. g. harvests). Abolishing this law contributed to the financial crisis. Since then, post-crisis banking and financial regulations encourage lending to governments as the ‘less risky’ option. This is misguided and endangers our shared future as the real wealth creators are deprived of the start-up credit they need.

Banks and money can be good servants but are bad masters. Markets cannot exist without rules and these need to promote the creation of real wealth, not unpayable debt. Financial instruments should only become legally enforceable contracts when they serve the real economy. Just like cars and medicines, they need to follow the precautionary principle and be given the social privilege of legal status only when they are shown to be safe and beneficial.

Today, much urgent work to build and protect our shared future is not financed because it is less profitable than speculation and gambling. This destroys jobs, destabilises societies and threatens or delays investments required to ensure sustainable development. Expanding renewable energy production, resource recycling and efficiency, ensuring food and water security, are all urgent and exciting challenges for economic entrepreneurs.

Ensuring that the needs of entrepreneurs for credit are not ignored by banks, in favour of financial trading and the production of nothing but money, is vital for our future. Without access to financial capital, work to build a sustainable future is blocked or delayed and citizens will remain out of work while there is so much of it needing to be undertaken.

Exemplary Policies

The World Future Council is actively seeking to highlight proven future-just policies on this topic. Do you know an example of a best policy which meets the future-just lawmaking principles and significantly supports fair conditions for future generations? Let us know here!

Global Pact

Implementing sustainable solutions to ensure the financial sector serves the real economy contributes to the progression of our interconnected global movements.

The World Future Council invites you to join us as a voice for future generations. The ‘Global Pact’ aims to build an effective ‘Coalition of the Working’ based on our common values in an effort to move from competition to collaboration, individualism to holism, all in the aim of securing our shared future through mutual successes.

Please contact us if you are interested in working together to further the urgent priorities of the Global Policy Action Plan.

 

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