Argentine Social Money Movement

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Extensive report on the Argentinian experience with the alternative currencies after the 2001 crisis, i.e. the Trueque and Creditos.

By Sergio Lub and Thomas Greco.


Report from Argentina – The Rise and Collapse of Red Global de Trueque and the Social Money Movement. Thomas H. Greco and Sergio Lub, May 27, 2003

Background & History

In 1991 the Argentine government adopted policies favorable to foreign banks and investors -- IMF rules for “structural readjustment,” privatization of government assets, and parity between the Argentine peso and the U. S. dollar. These policies that were supposed to reduce Argentina's international debt, instead, caused it to increase further, and in the process caused increases in the poverty and unemployment rates as well, even among middle-class professionals.

People at the grassroots responded with their own self-help and mutual aid initiatives. In 1995, the first trueque club was started to enable a group of friends and neighbors to barter goods and services among themselves. Very soon, other clubs began to spring up, and it was recognized that some kind of currency was required to facilitate trading and transcend the limitations of direct barter. Trueque clubs proliferated throughout the Greater Buenos Aires region and very quickly spread to other provinces. Various clubs began to issue their own credito currency notes and by early 2001 there were several dozen currency varieties in circulation.

By this time the clubs had formed an informal network called the Red Global de Trueque [Global Trading Network]. Dozens of “trading fairs” were being held daily in various places and a multitude of currencies was changing hands. As might be expected, some unscrupulous people saw this as an opportunity to enrich themselves, either by issuing their own currencies without adequate social or economic backing, or by counterfeiting the major credito currencies. Despite these problems the number of participants in the trueque movement continued to grow.

By Dec 2001, the Argentine government could no longer sustain its 11-year old policy of Dollar to Peso parity. As capital rushed out of the country, dollar and other foreign currency reserves were exhausted. Amidst this financial “meltdown” all banks were closed for months and people were not allowed to access their bank deposits. The peso was devaluated and chaos reigned.

Some banks did eventually re-open but allowed people to remove only very small amounts of cash each week in order to forestall a galloping inflation. Without sufficient access to cash to live on people in huge numbers clambered into the trueque “lifeboats.” Between December 2001 and July 2002, the amount of trading in the trueque clubs and the amount of credito currency in circulation exploded. By August, however, the trueque movement had all but collapsed. What happened?

The Problems with the RGT Creditos

It must be understood, first if all, that there were a multitude of trading clubs in operation. Some of these, particularly the ones outside of the Buenos Aires region, were operating as isolated and autonomous entities, but the majority of the clubs were connected in a loose network. There were also a multitude of different currencies that were being circulated and accepted at the trading fairs. As early as 2001, some irregularities and falsification of currencies had been observed and some of the currencies were being refused, and there was a growing factionalism among the various leaders and organizers of the movement. Between that time and mid-2002, many clubs adopted the currency of the PA.R. and their currency became the dominant form. With this centralization and the attendant weakening of the social bonds and protocols of the local clubs, the stage was set for trouble.

During our visit to Argentina in March 2003, we met with and had discussions with many of the core people in the Trueque movement. We received conflicting accounts from various people and it is difficult to uncover a clear picture of what happened. Nevertheless, when all is said and done, we feel we are able to offer the following opinions.

The fundamental problem that led to a general collapse of the social money movement in Argentina was FAILURE TO RECIPROCATE, which arose from:

  • 1. The lack of a clear agreement with those to whom credito notes were distributed,
  • 2. Probable appropriation by the management group of large amounts of notes for their own gain (there seems to have been no accounting for how much they paid themselves for their organizing and administrative efforts),
  • 3. The absorption of large amounts of creditos that were issued as political gifts to supporters of various candidates,
  • 4. Selling creditos for pesos at huge discounts as a private money making scheme,
  • 5. The allocation of creditos in “starter kits” to everyone and anyone without a clear agreement of rights and responsibilities or the usual commitment to a local solidarity group,
  • 6. The injection into the economy of huge amounts of counterfeit credito currency .

Failure to reciprocate is what causes inflation, which leads to loss of confidence, which causes producers to stop participating, which leads to currency collapse.

The underlying structures that allowed it all to happen were:

  • 1. Issuance by a central authority,
  • 2. Secret books and lack of accountability to users,
  • 3. Primary reliance upon paper currency without adequate safeguards against counterfeiting and falsification, and,
  • 4. Failure to take appropriate and timely action when problems became apparent.

It is extremely important to know who is issuing a currency, and on what basis. That, of course, does not rule out the anonymous transfer of the currency between others who are not part of the issuing group. There are many advantages to using credible bearer instruments.

Some people were able to acquire creditos at little or no cost and then sell them on the market for whatever price they could get in official money. If the notes had been properly issued on the basis of a solid commitment and the exchange of real value, no one would have been willing to sell them at much of a discount.

In general, it can be useful for someone to "make a market" in a private currency. The market price of a currency will reflect the adequacy or inadequacy of the currency's underlying structures, and will provide a bridge or semi_permeable membrane between the community currency economy and the formal economy, allowing those with earning power in one economy to spend in the other. That's the way it works when we travel to a different country. For example, we earn in the USA but we want to spend in Argentina, or Ecuador, or Europe, etc. That requires the exchange of one currency for another.

The PAR group (former RGT), in their rebuilding process, has not adequately remedied the structural defects. From our conversations with them, it seems they intend to hold on to the power and are not planning to open up the information. Also, their exchange plans will carry over the inflation of the old notes into the new.

Need for Further Investigation

It is extremely important that we gain a clearer picture of the Argentine social money experience that highlights the fundamental sources of the problems and the mistakes that were made so that others will be able to avoid repeating them in the future. That kind of penetrating report will require a thorough investigation involving boldness, tenacity, and courage. The usual journalistic human_interest story will be of little use to anyone.

The testimony of the principals in PAR and the other main Trueque groups needs to be corroborated by other testimony, documented evidence, and physical evidence. While the key players we spoke with went to great lengths to explain their actions, they take little or no blame, arguing that all the problems they had came from the outside, either by political authorities jealous for power, thieves, or unknown counterfeiters. The picture that we see emerging suggests that the sudden drop of Tueque's popularity was also related largely to mismanagement and rivalries among those who are fighting for turf.

There are a number of questions that are still begging for more complete and verifiable answers, specifically:

_ Horacio Covas says that the Trueque is money created by the people, if so on what does he base this statement? All of the evidence we saw indicates that the PAR, has been, and remains, fully controlled by their 3 founders, with little or no transparency or accountability to the users. In practice the PAR functions more as a for_profit partnership than a public interest non_profit or cooperative.

_ What is the nature of the agreement that members have with the association? What is the basis of emission of creditos? How are they placed into circulation? What are the limitations on the emission? How much has been emitted? What safeguards exist to prevent improper emission and over_issuance? Does PAR have open records? Does par have a governing board or an oversight board? How are the governors selected? What is democratic about the PAR?

_ When was the counterfeiting problem first noticed and when were the first countermeasures taken? It seems to us that the counterfeiting problem had already begun to appear when we first visited more than two years ago. Why did the PAR not react to it? Was the initial counterfeiting internally generated, as many outsiders have told us? Was it simply a case of poor management and control systems that allowed dishonest behavior among their helpers and staff?

_ The NY Times article of May 6, 2001 shows a cashier at the entrance of a Bernal Club de Trueque selling creditos for pesos. It looks like this was done by the organizers themselves. If so, the prohibition against buying and selling creditos did not apply to management. If so, why did PAR take this course?

_ PAR's brochure indicates that they were burglarized several times; in the last case, they claim that more than 100,000 pesos were stolen from their vault. How did they happen to have so much cash? What was that money being held for? If the money was from the sale of creditos, how many creditos were sold and entered into circulation to obtain such amounts of money?

_ Do the founders and operators of PAR and the other groups that are issuing creditos have any understanding of the proper basis for issuing a currency into circulation? Do they know the causes of credito debasement (inflation)? If they do, why did they allow activities that destroyed the very institution they created?

_ There has been some talk about political pressure and pressure from organized criminals as a way of explaining the actions or inactions of PAR. To what extent do these factors appear to explain the above self_defeating behavior, and do they continue to be problematic in the attempts to revitalize the Trueque movement?

Also, there are some important historical background questions:

_ On our 2001 visit, we noticed several different types of credito notes being exchanged at the Trueque fairs. How many different groups or individuals issued credito notes in Argentina from 1995 to the present? Which ones were the biggest and most influential? How many creditos did they issue, and how? How many participants and clubs did each of them have? How many are still functioning and what is their size?

_ Among so many experiments, there are some that had fewer problems? If so, what have they done differently and what can others learn from their experience? For example, we visited Alberto Marino in Mendoza. He has organized a legal entity, La Fundacion El Prosumidor, which is issuing a social money called EcoVales. That entity has a Board of overseers composed of people that are recognized as pillars of integrity in their community. Their entity has, by original design, open books as required by law.

_ What did PAR, as the founders, the largest group and the keepers of the vision, do to support or undermine the other issuers of Social Money?

_ What type of accounting and auditing was done? At present, are numbers more accessible and operations more transparent than before? What realistic measures are being taken to prevent a recurrence of the problems? Does the evidence support the claims that the primary motivations are idealistic (promoting social solidarity and economic self_sufficiency) rather than personal gain and ego_gratification?

_ In our visit to the Bernal fair, participants were using “fichas” or ledgers on which the prosumers recorded their transactions, positive when they sold and negative when they bought, with the goal being to have a zero balance at the end of the day, but old timers, because of their reputation, were allowed to carry forward a negative balance until the next fair. This follows the Mutual Credit system model, where exchanges can happen without the need of the paper currency that created so many problems. This is the system I (Sergio) recommended organizers to adopt during my visits and it was offered along with free software and training to be able to maintain open accounting on the Internet. Does the use of these ledgers indicate the new direction in which the PAR's Trueque is evolving? This would allow each participant's account will be kept openly on the Internet from which they can issue or deposit their paper notes as they wish.

_ When we asked how helpers at PAR got compensated, including its dedicated founders, we received unclear answers. It is obvious that they need a transparent system in which the income to cover their expenses is clearly spelled out, including the compensation for those who help run the system.

These are the kinds of things that are important to us and to the future health and viability of the social money movement. What the system needs is a fair and thorough investigative reporting of the kind that is not common these days.


Our recommendations for creating sound, equitable, and sustainable community exchange systems and currencies include the following:

Transparency and accountability to the users is paramount. Any currency or exchange operation should be completely open and above-board and accountable to the users. In order to make an assessment of the value of a currency, the users must have adequate and timely information about the basis upon which it is issued and the amount in circulation relative to its backing or foundation.

Assurance of reciprocity is essential to the long term viability of any exchange system. This may be achieved through a variety of means. Most importantly, those to whom currency or credit is allocated, i.e., those who are empowered to issue currency by spending, should clearly understand their responsibilities, and there should be some means of assuring their compliance with their agreement. That could be based on collateral and legal enforcement, but it need not be. It can also be based upon mutual responsibility and peer pressure within sub-groups.

Network of Trust. Every exchange system is built upon trust. That trust may be based upon a variety of foundations. In an exchange circle or currency system based on mutual credit, there must be, at minimum, some means of verifying the identity of each participant and limiting the amount of credit they may emit. Beyond that, it is desirable that participants be able to rate each others performance and that such information be readily available to all.

The detailed specifications of each exchange alternative exchange system must be tailored to the cultural and legal environments within which it operates, as well as the available technological infrastructure, but an ideal Mutual Credit system should conform to the following criteria:

  1. Currency or credits are issued interest-free.
  2. Currency or credits are issued into circulation upon the sale of products and services and their acceptance by the seller.
  3. Each participant is committed to reciprocate by accepting the currency or credits when s/he makes a sale.
  4. Credit limits are set by participants democratically and easily.
  5. Transparent accounting available on demand on the Web.
  6. The addition of ALL outstanding balances is always equal to ZERO.

Whatever one might consider to be the ideal configuration, we think there is a need for some intermediate steps to be taken by business associations, municipalities, and regional governments, steps that will begin to liberate local and regional economies from unhealthy dependencies and destructive aspects of the global financial regime."

More Information

Links from Carlos Boyle (in Spanish):

  1. also en English
  2. Typical club´s page, anchored in the 02´s
  3. a reacent news about new barter club in Mendoza, not based on creditos.

Reference provided by Wolfgang Hoeschele:

Peter North. 2007. Money and Liberation: The Micropolitics of Alternative Currency Movements. Minneapolis: University of Minnesota Press. Chapter 8: Surviving Financial Meltdown: Argentina’s Barter Networks.

North provides a very interesting account of the rise and fall of the Argentine barter networks. According to his account, the RTS (Red de Trueque Solidario) did a better job of ensuring trust and accountability - is this network still in operation, and how are they doing?