Money has recently taken different forms – from traditional notes and coins to credit notes, vouchers and plastic cards. However, all these forms of money have a common denominator – currency of one country or another.
ECO Capacity Exchange – a London-based trading platform – uses a unique unit of exchange that directly relates to the value of goods and services, enabling companies to trade in a more inclusive and just alternative economy.
The ECO Capacity Exchange is a global marketplace that enables organisations to create value from their unused and available capacity. Its members improve their financial performance and competitiveness by stimulating new sources of capacity-backed demand, generating incremental revenue and increasing profit.
Trades on the exchange are conducted using an Enterprise-backed Credit Obligation called the ECO®, a new trading unit fully backed by investment-grade multinational companies. The originality of the ECO is that it circumvents market imperfections, minimising the highly speculative and volatile nature of current monetary systems.
It has been developed with the help of some of the world’s leading economists and global thought leaders, who have contributed to its ability to unlock the enormous potential that exists in the world’s unutilised capacity.
Currency exchange and Islamic finance
In recent times, Islamic banking and finance has started emphasising the ill-effects of the use of interest in financial transactions. However, even Islamic banks and financial institutions have no choice but to deal in interest-based money created by governments around the world.
It is a matter of concern for several Islamic finance scholars that the existing basic unit of exchange of value (ie sovereign currencies) is itself not issued in a way that would be considered truly Shariah compliant.
In fact, at present there is no formal financial basis for their issuance, and they are generally backed by government debt, which in itself is issued through interest-bearing instruments.
The ECO addresses this core issue as its issuance is based directly on the actual ability of the exchange members to produce goods and services – which is the true concept of ethical money issuance. ECO does not earn any interest; its utility is solely for actual trades.
Furthermore, by turning unused capacity directly into a new source of credit and working capital, the ECO creates many potential social and economic benefits. The creation of a more level playing field for global trade will undoubtedly promote sustainability and empower prosperity across the world.
ECO offers ideal solution
The efficient trading of such capacities through an alternative non-cash mechanism of exchange, like the ECO Capacity Exchange, would provide new sources of working capital, result in a more efficient use of resources and contribute to the growth of global and local economies.
Provision of an exchange of value based on the economic underpinning of the actual and intrinsic value of the products and services traded greatly reduces the friction and risks inherent in the current international monetary system, and links more directly to the real economy, reducing potential negative impacts of speculation.
In an emerging and developing country like Pakistan, as long as tradable capacity is available, economic growth and development can be funded without being constrained by limitations in trade financing or other sources of traditional cash or credit.
According to the International Labour Organisation, “creating buying power is the first priority among strategies for the emerging market economies to truly break the vicious cycle of poverty, isolation and economic exclusion.”
ECO Capacity Exchange can help to bring those countries, underserved by the current financial system, into the economic forefront. It offers a means for people to increase self-sufficiency, reduce poverty and become stronger participants.
In conclusion, the ECO solution offers a means by which to efficiently mobilise and increase capacity and working capital within a community that is non-reliant on traditional interest-bearing instruments and credit facilities.