Regional Currencies

Description

'A regional currency is a particular form of complementary currency: it is an agreement within the community of a region to accept something other than legal tender as a means of payment. It connects unused resources with unmet needs at the regional level. Some regional currencies start out as smaller local systems and grow to serve a larger area in response to demand over time, like the Chiemgauer in Germany (p.XX) or the Dane County Time Bank in the USA (p.XX). Others begin to serve a whole region from the beginning, like the Talente Tauschkreis in Austria (p.XX) or the WIR Bank in Switzerland (p.XX). None of the systems featured in this book have yet grown to any significant economic scale but they all play an important role as demonstration projects for what is possible in creating wealth locally and maintaining community." (source: The Promise of Regional Currencies)

Discussion

Policies for regional currencies

Margrit Kennedy et al:

Modern money is expected to serve as an exchange medium, a value benchmark or unit of calculation, a value storage medium and a commodity all at the same time. The savings aspect requires an exponential growth factor to pay interest and money now has unlimited mobility through international financial markets. The savings function is in direct conflict with the exchange function and does not support the creation of local jobs.

A regional currency can be designed to emphasise the exchange medium and accounting unit functions and minimise the savings function. Its mobility, i.e. its geographic scope of validity, can be reduced to a manageable size and its value as a storage medium must be restricted to being ‘merely’ stable, without the additional attribute of interest.

The essential aims are:

• to reduce unemployment,

• to stem the drain of purchasing power from the region,

• to open up new avenues to enable local government to fulfil its designated tasks.

Studies have shown that the European Union’s regional policies – both top-down and bottom-up - have not prevented the drain of capital, value creation and human resources from regions and that the key factor of the monetary framework is largely ignored in regional policies.

Peripheral regions need (more than others) a financial instrument which

• is tailored to their specific needs,

• accommodates public benefit oriented credit mechanisms and

• entails a reduction in capital mobility.

On this basis, completely new regional economic cycles can develop which promote:

• economic stimulation instead of stagnation,

• stabilisation or growth of the population,

• an increase in regional purchasing power and thus an improvement in municipal finances,

• a positive, optimistic identification with the region in the place of disillusionment,

• improvements to the infrastructure and increased local autonomy instead of the sale of utilities to extraregional concerns,

• a greater sense, amongst the local population, of having a say in how things are run, of being able to take and exercise responsibility for its own destiny and development,

• the preservation and development of employment opportunities and incentives for firms to remain in the region.

‘Regio’ is the generic name given to regional currencies in Germany. The term highlights the distinction between the regional currency and a national or international one. The ‘godfather’ of the Regio is the mereau described in Chapter 3.

Regio money is designed to be ‘worse’ than the Euro:

• It is not legal tender and businesses are not obliged to accept it - it works on a voluntary basis of mutual agreement.

• It can only be used within a limited geographical area, which maintains its own ‘brand’ of Regio with its own name and image.

• A charge is levied to convert Regios into Euros or into another regional currency.

• It cannot be invested to earn interest.

• Some Regio systems build in a ‘circulation incentive’ to make the money lose its value.

These deliberate limitations give the Regio a different social and economic space within which to operate. People will learn soon when it is better to use Euros and when to use Regios. The Regio is not anti-Euro or the Euro’s usurper: it steps in and stays where the Euro leaves. As long as the Euro exists, it will remain the main currency of business. The Regio complements it and fills local gaps.

When money is scarce and people are losing their jobs, regional currencies step in and create both jobs and money: Banco Palmas (p.XX) has created 1,800 jobs since 1998 with its combined local currency and micro-credit services. But they can also do much more. They can support young people in trouble to give something back to their community and raise their self-esteem, like Dane County Time Bank’s youth court (p.XX); they can help organic farmers to find new customers for their products like the Bremer Roland (p.xx); they can help preserve an old community centre and revive community spirit like the Blaengarw Time Centre in South Wales (p.XX).

As an economic tool, regional currencies are much more effective when integrated with other mechanisms: with micro-credit like Banco Palmas (p.XX) or BerkShares (p.XX); with co-operative and social enterprises like Equal Dollars (p.XX); with conventional banking services like WIR Bank (p.XX). And every region contains a wide variety of ‘natural’ partners for a regional currency: social economy initiatives like those above; chambers of commerce; voluntary sector umbrella bodies; environmental organisations and Agenda 21 groups.

The next generation of regional currencies needs to scale up to play a more significant socio-economic role. But more than sheer numbers of people or potential economic impact are relevant to create genuine regional currencies." (source: The Promise of Regional Currencies)

Example

1. Banco Palmas