Adding open networks to the current money system

Creating financial innovation with the Open Money principles doesn't have to be all or nothing.

Just to make it clear before we go on — while the current financial system has its soft spots or its downsides, there are also a lot of efficiencies and details that work well. Just because we keep hammering on the idea of Open Money, it doesn’t mean we need to completely forsake the existing system.

Building a new kind of economy or new forms of economic opportunity shouldn’t be only the pursuit of maximalists, or people who believe that we should only have one system or one way of doing things.

The great thing about building with open, interoperable networks is that people can choose what kind of tech stack works best for them, but still contribute to or benefit from a larger, more robust network.

The same logic applies to the existing financial system. The goal of Open Money shouldn’t be to completely overthrow what's working now — especially because there are aspects that work well.

Instead, the goal is to build better complementary systems that can enhance existing functionality and create new kinds of financial and economic opportunities.

Here are a few things that work well with the current financial system:

Stable-ish: While the global financial system is largely stable, or at least experiences long periods of stability, it does have moments of crisis. However, the fact that it has endured for centuries, surviving wars, recessions, and depressions, demonstrates its resilience.

Central banks and institutions like the International Monetary Fund step in to mitigate extreme volatility, acting as shock absorbers during turbulent times. While these mechanisms aren't perfect, they provide a degree of predictability that purely experimental or decentralized systems have yet to achieve.
Trust through maturity: The financial system has had time to refine its processes, enforceable contracts, and risk assessment models. Banks, for all their flaws, are entrenched institutions with established reputations. The credibility built over decades (or even centuries) means individuals and businesses feel confident transacting within the system.

Consider how the insurance industry operates — trust is built into actuarial science, policy enforcement, and legal frameworks, making financial contracts enforceable in a way that nascent open systems struggle to replicate at scale.
Well-regulated and defined rules: Governments and regulatory bodies have constructed an intricate web of financial laws that, despite their bureaucracy, provide structure and protection.

Anti-money laundering (AML) policies, Know Your Customer (KYC) protocols, and capital reserve requirements all exist to reduce systemic risks. While innovation in open financial systems often chafes against regulation, clear rules create accountability, ensuring markets don’t devolve into chaos.

The takeaway here is that there should be lots of options and functionality built into money systems, just like there are with other kinds of digital stacks.

While the elements of money or finance do make having lots of options difficult, it’s not impossible. One of the best ways to insulate against the need for a rat’s nest of regulations that might stifle innovation is to build with open principles, making new kinds of financial technologies auditable and accountable.

Obviously, open systems can’t work everywhere, but they can work well for complex or public organizations and agencies tasked with managing public funds or treasuries.

The key is interoperability, where the best aspects of traditional finance merge with the transparency and efficiency of open financial architectures. This hybrid approach can create a more resilient and inclusive economic landscape, rather than forcing an all-or-nothing paradigm shift.

This post is part of the Open Money project, an ongoing series that forms the basis of a longer work. Subscribe to get a weekly update as it unfolds.

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