Financial activities such as stocks and futures carry high risks for many, while financial institutions and capitalists can exploit informational advantages and price manipulation to reap massive profits. This unequal reality makes the wealth market a game for a select few. So, how can we make the financial system benefit everyone? We need to reexamine and adjust the framework and rules.
1. Popularizing investment knowledge: Enabling everyone to participate in finance
Most people shy away from the financial markets due to unfamiliarity with technical jargon and complex rules. Terms like Contango (spot premium), LIBOR (London Interbank Offered Rate), and CDS (Credit Default Swaps) may be well-known within financial circles but can seem distant and inaccessible to the average person. However, participating in finance doesn’t necessarily require mastery of these terms. Basic financial education should cover the following:
- The operation mechanisms of the financial markets
- The basic principles of investing, such as the balance between risk and return
- How to identify opportunities and pitfalls in the capital market
Real-life example: How the spread of financial knowledge can change destinies
In India, the Pradhan Mantri Jan Dhan Yojana initiative, launched in 2014, introduced millions of low-income individuals who had never accessed banking services to the financial system by promoting bank accounts and financial education. This not only improved household financial management skills but also significantly boosted savings rates, providing new momentum for economic development.
Only when everyone understands the basic knowledge of financial markets can we truly achieve a wealth distribution system where everyone can participate.
2. Improve transparency in corporate operations and investments
Ordinary investors often cannot gain a clear view of how the companies they invest in operate. For example, who is managing the projects? How are the company’s resources allocated? What production processes do the products undergo? These details are often hidden in a “black box” and only come to light when a scandal breaks. For example:
- Enron scandal: This company, once hailed as one of the most innovative in the U.S., used complex financial maneuvers to hide massive losses, ultimately leading to significant losses for investors.
- Wirecard scandal: The German payment giant was exposed for financial fraud, resulting in the evaporation of billions of euros in assets, leaving investors with nothing.
Investors need not only returns on their investments but also the right to be informed about the use of their funds and the operations of the companies they invest in.
3. Promoting borderless financial investment
The current financial market still has many restrictions, such as investment barriers between countries and capital flow regulations. This not only reduces the chances for ordinary people to enter the global market but also limits the funding channels for small businesses and social organizations.
Envisioning a borderless investment environment
In the future, borderless financial investment would allow individuals to provide funding for the following entities:
- Multinational corporations or small social enterprises
- Specific projects or specific aspects of a project
- An individual with leadership ability
For example, company employees could invest in their boss’s decisions instead of solely relying on the overall profitability of the company. If a leader’s performance is poor, investors could withdraw their investment, promoting more transparent management and higher execution efficiency. This form of investment could also have a significant impact on the company’s power structure, which we will analyze further in the future.
The support of blockchain
Through blockchain technology, we can realize this form of borderless investment. For example, decentralized finance (DeFi) platforms allow individual investors to directly participate in global projects without intermediaries. This technology is gradually breaking down the geographical limitations of traditional finance, allowing more people to benefit from global economic growth.
4. Advocating for socially responsible financial investment
Currently, the main goal of financial investment is still wealth growth, but we must introduce more concepts of social responsibility. Before making decisions, investors should consider the following questions:
- Can the company bring positive impact to society?
- What is the potential for the company’s long-term development?
- Are there any actions that exploit employees or harm the environment?
Trends in Socially Responsible Investing (SRI)
In recent years, socially responsible investing (SRI) has gradually gained attention. Although it is still in its infancy and has yet to fully realize its potential for “universal participation,” some trends are already emerging, such as:
- ESG Standards: Environmental (Environment), Social (Social), and Governance (Governance) criteria have become key reference standards for many investment funds. According to a study by Morgan Stanley, the global assets in ESG investment funds reached $31 trillion in 2019, highlighting the market’s focus on social responsibility.
- Sustainable Development Bonds: Green bonds and social impact bonds, advocated by the United Nations, have provided substantial funding for global public welfare projects.
This type of investment not only helps improve social and environmental conditions but also encourages businesses to develop in a more sustainable direction.
Our goal at Yicheng Commonweal: Social Citizen Finance
At Yicheng Commonweal, one of our goals is to establish a “Social Citizen Finance” system that allows everyone to participate and benefit. Through methods including but not limited to the following, we aim to promote a fairer financial ecosystem:
- Public Economic Education: By offering open courses and online resources, we aim to help more people understand the basics of financial operations and how a social citizen can use investments to safeguard their rights.
- Transparency Policies: Advocate for businesses and social organizations to disclose the use of funds and operational details.
- Technological Innovation: Leverage blockchain and decentralized financial tools to provide ordinary people with secure and efficient investment platforms.
This model not only reduces the inefficiency and bureaucracy of traditional financial institutions, but also enhances the overall resilience of society, creating a more equitable and diverse economic system.