Artists as Bankers

In the midst of a dysfunctional financial system, a group of economists and artists have created an innovative cooperative to run an experiment of an alternative banking. The Art Reserve Bank will mint exclusive limited-edition coins for exchange of euros. Each month a different artist will design a set of four coins and each one will be issued in only 100 copies. The total circulation of the coins will be limited to 25,000 – 250 emissions of 100 coins, designed by over 60 artists.

The bank will open in April as the first set of coins will be designed by the Scottish avant-garde artist Bill Drummond who is very familiar with the relative value of money – in 1994, his K Foundation burned one million pounds as an artistic and public engagement act.

“Once the Art Reserve Bank opens its doors, you will be able to exchange your regular money into a new currency. We call this currency Art Works — for that is what our coins really are: unique works of art.” said Ron Peperkamp, member of the banks’ Board of Directors. I spoke with him about the idea behind the project.

“The Art Reserve Bank has been established as a monetary experiment to create awareness and involve the public in the discussion about redesigning the finance system. We think that at the moment only economists, bankers and politicians are engaged in the conversation about the money and the future of everybody.”

The goal of the project is to translate abstract monetary principles into tangible products and invite the public to reflect and discuss the very foundations of the finance system. The “art bankers” hope that more people will start to exchange ideas and co-create solutions for the challenges ahead.

Monetary Experiment

The project is a creative and playful artistic endeavor but it shows an important underlying reason for the financial crisis: the huge amount of virtual value pumped into the worldwide monetary system by the banking.  Therefore, the Art Reserve Bank will be running the five-year experiment in a way that challenges the existing banking system. The goal is not to offer an alternative currency or advocate for the gold standard. Rather, the cooperative aims at pointing the debate to the heart of the banking system problems. Therefore, the total circulation will be restricted and registered in advance and all coins will have a “money-back guarantee.” Each coin will be a transferable deposit, accumulating a simple 10% interest from the date the coin was issued. The exchange rate will be defined by the online market, where individuals can exchange, buy or sell coins. The initial rate will be set to €100 and with the guaranteed refund policy, it could not decline or create market crash.

Building the Bank

Not only the site of the bank is unique – in the center of the financial district of Amsterdam – but also, the “building” itself.  It will be a bank “stripped to its bare essentials: simple in concept and literally completely transparent.”  The head office will be a bare terrain, measuring 45 x 35 m with only three structures: the press house (a 4m glass cube for the 6-ton friction press), the safe (a heavy concrete cube, “safer than the Dutch National Bank”), and a counter where customers could exchange coins for euros. The blueprint of the bank was drawn prior to construction on the actual site with 1:1 scale (a brilliant idea).

Financial forecasts

Ron Paperkamp would not make prediction of how long the bank would be in operation: “It will not be more than five years as after the preset five-year period of the experiment the bank liquidates itself. Obviously the bank will by then have insufficient capital to answer all calls on deposits. We think however, that most people will not want to exchange their Artworks back to euros. Which immediately proofs the possibility of art as an intrinsic value of a reserve currency”

I am definitely thinking of getting a coin from the Art Reserve Bank! And I wonder… should we form an art innovation group at the Finance Lab?

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