PANAYOTIS ECONOMOPOULOS, MA, PhD
PRSESIDENT, ECONOMOPOULOS FUND
AND EVANGELOS MAVRIKIS, MSc, PhD
SENIOR ASSOCIATE, ECONOMOPOULOS FUND
We propose an electronic exchange system desired to promote multilateral trade of goods in a business to business (B2B) market. The goal is to partly overcome substantial liquidity shortage and excessive inventory levels by utilizing on information technology to match multilateral trading needs not served by the monetary medium of payment. First, we formulate the mechanics of aggregate exchange as a set of bilateral transactions that link buyers and sellers into a closed network throughout time. Second, we then restructure the network via regrouping bilateral transactions into multilateral barter trades, suppressing the required circulating liquidity and its cost to only a fraction of its original level. Third, the remaining settlement requirements can be covered by the issue and circulation of system designed credit units within this electronic market which is based on a customer specific leverage of cash deposits. Fourth, these cash deposits act as collateral insurance against probable malpractices and protection against fraud, default and quality mismatches of trades of participating customers. Fifth, the proposed system communicates with existing barter exchange systems in order to enlarge the market potential of the orders entered in the proposed system. Sixth, the proposed system tends to control prices and this reduces price variation as transactions are settled with a series of product swaps rather than monetary exchange.
Financial benefits for the system authority arise from managing the cash pool created by subscription and order fees, interest from cash deposits and commercial advertisements. [PDF]