Reengineering money

Martin Wolf's column on Financial Times on November 27 2007 ("Why banking is an accident waiting to happen") analyzes the moral hazard of the banking sector and says; "They go round regulations, just as water flows round an obstruction." That's exactly what will happen even if higher capital requirements are introduced or scrutiny of big banks is intensified as proposed by him because of the way incentives are structured around the current fiat money system. This vicious circle and the economic and social instability it inflicts on the society will never end unless the root cause is addressed. What seems increasingly clear, to me, is that we should start earnestly considering alternatives to the current money system that necessitates privileged treatment of the banking industry as a public utility - in credit creation. Taking steps to promote local currencies based on mutual credit, which circulate in parallel with national currencies, and even to experiment with demurrage, as Bernard Lietaer has been advocating is worth more serious attention in order for our entire economic system to break the costly vicious cycle.