“On the 8th December 2011 the United Kingdom Government unveiled a report on excess capacity exchange and barter. According to the City of London press releases:
“Capacity exchange development presents untapped opportunity for London
The development of an innovative, global capacity exchange hub in London could improve productivity by reducing marginal spare capacity, stimulating innovation and providing an alternative to conventional credit, according to a new report released today commissioned by the City of London Corporation, Recipco and the Economic and Social Research Council.
Capacity Trade and Credit: Emerging Architectures for Commerce and Money highlights how businesses with spare capacity in their own goods, services or infrastructure – often the case in economic downturns – could utilise their surplus via an exchange to ‘finance’ the purchase of other goods and services that they need. Capacity exchanges have the potential to offer SMEs and larger businesses an alternative credit stream in the face of a challenging environment for conventional credit as banks rebuild bank balance sheets.
According to some reports, 20% of global trade (over US$ 100bn) takes place in non-monetary exchanges. Capacity trading across the world has traditionally taken the form of simple bartering, which involves two parties – commonly SMEs in local or national trading networks – settling a transaction through a flow of goods or services rather than sovereign currencies – or cash. This form of exchange has traditionally been seen as less efficient than monetary trade since it requires finding a suitable counterparty at one point in time and is often contractually more complex.
In contrast, the internet-based multilateral exchange discussed in the report could potentially lower transaction costs through market clearing. The report finds that London is uniquely placed to facilitate the expansion in scale needed for larger government and multinational organisations to utilise capacity trading more effectively. ”