Could we consider a “commercial currency”, alongside government currency (notes and coins), bank currency, and perhaps gold and bitcoin?
During the recession of the 1890’s, a store owner, Silvio Gesell (of Wörgl fame) noticed the need for his products had not abated, but customers could not purchase through lack of money. He concluded that products and services were the supply side, and money the demand side of the economy.
We now know that recessions, and all the unemployment, bankruptcies, and suffering, are caused by credit contraction to main street (we can of course still have financial asset inflation).
We propose another current asset type to accommodate settlement of payables/receivables without the need for a line of credit. Let’s call this account “commercial currency”, alongside bank, petty cash, receivables, inventory, and other current assets.
Nothing changes regarding extension of credit to business partners, but payments are done directly between trading partners, without the need to transfer balances at 3rd party corporations called banks (who have nothing to do with the transaction).
Amounts are simply settled through EDI, REST, etc., and both ledgers updated to show the payment in commercial currency at the nominal amounts.
Two questions arise of course, namely 1) valuation, and 2) trust (and reconciliation).
1) As we re-evaluate inventory, receivables, and other assets on acquisition or termination we would also adjust the “commercial currency” account.
2) One benefit of banks is the trusted 3rd party. A substitution could be a “triple-entry” blockchain that reconciles accounts in realtime between business partners while maintaining privacy. In this way, both partners see the exact same entries, not two sets of accounts. (but of course, it does have to be a blockchain; an EDI VAN could suffice for eg.)
The glaring benefit of this “commercial currency” account is a reduction in financing charges (and risk of coverage), and thus also resistance to recessions.