Certificate Course in Community Currencies for Grassroots Development

The following wiki will be used to hold all of the support material for the Course in Community Currencies for Grassroots Development created by Grassroots Economics (GE). Through the course you will be able to learn from the experience of Will Ruddick and the various projects his organization has set up in Kenya.

http://grassrootseconomics.org/certificate-course

Overview

This course will immerse you into the world of Community Currencies as a tool for economic and community development. We will cover why and how Community Currencies have been implemented in marginalized communities as well as their history, set backs and future projections. After completing this course you will be have a strong foundation to design, customize and implement Community Currencies.

Topical Outline:

• Community Currency Theory: development economics, history of money, financial systems and debt, currency models, goals standards and ethics.
• Preparation & Development: community participation and ownership, system design, voucher creation, communications, partnerships, and legality.
• Setup & Launch: cooperative facilitation, collateral asset development, financial sustainability, and marketing.
• Long Term Care: long-term support, audits, Community Currency renewal.
• Management: system maintenance, legal reporting, accounting, currency circulation, administration, data collection, and personnel.
• Fieldwork: on-the-ground survey work and interviews; lessons learned from previous Community Currency models; taking part in community currency events and activities; economic resource mapping.

To register for the course do it directly through the GE page -http://grassrootseconomics.org/certificate-course

Below you will find relevant materials to fully understand the taxonomy of the currencies and support materials to be able to design and implement them.

Theory

What is Money?

Definition: According to the Bank of England, in a modern economy, money is a type of IOU, but one that is special because everyone in the economy trusts that it will be accepted by other people in exchange for goods and services.

Functions:

• Medium of exchange
• Store of value
• Unit of Account

Characteristics:

• durability
• portability
• divisibility
• uniformity
• limited supply
• acceptability
• value

How are National Currencies Created?

• Sir Mervyn King, Governor of the Bank of England 2003- 2013 - “When banks extend loans to their customers, they create money by crediting their customers’ accounts.”
• “Right now bank deposits makes up over 97% of all the money in the economy. Only 3% of money is still in that old-fashioned form of real cash that you can touch.”
• Martin Wolf, who was a member of the Independent Commission on Banking, put it bluntly, saying in the Financial Times that: “the essence of the contemporary monetary system is the creation of money, out of nothing, by private banks’ often foolish lending”

How we got here

• In UK - Before 1844 only the government was legally allowed to create metal coins. Over time, the paper receipts had for their stored coins, became accepted as being as good as metal money. People effectively forgot that they were just a substitute for money and saw them as being equivalent to the coins.
• Coins were originally stored with Gold Smiths who became the first banks, and began to issue more notes than they had in reserve.
• Eventually the gold standard was completely lost and reserve requirements for banks were based on cash. But today those requirements have effectively vanished.
• Private Banks currently create 97% of the worlds money supply.
• By creating money in this way, banks have increased the amount of money in the economy by 11.5% a year over the last 40 years. This has pushed up the prices of houses and priced out an entire generation.

“What is the Salient Economic Unit?” - Jane Jacobs

Why do Nations have sovereign currencies at all?

-With banks in control of the credit supply, sovereign money or national currency today has lots much of it's meaning.= -Why should the Kenyan Government have to borrow at interest the money it needs?

Switzerland is a top performing economy in the world with a population of only 8 million people and has retained its own currency. – And 1 out of 4 businesses are part of Complementary Currency Programs – If 8 million people in the middle of Europe can have the top economy in the world and their own Currency – what would happen if all areas of ~8 million people could have their own currency?

Community Currency Theory

Global Economic Problems in Summary

Usury: Interest Bearing Debt: Money created as debt – On a global scale this ensures more money creation to pay interest. Since the ability to repay this debt nationally and globally is impossible (not enough money in the system), more money must be created (at interest) to pay off the current debt – and so on.

Fiat: Money created with no backing. There is little to no regulation on the private banking system’s creation of credit. This is defined as a bubble creating huge profits for banks and increasing instability (bubble) and inequality.

Inflation: a factor of 3-5x faster than production worldwide.

Local Economic Problems in Summary

Market Instability: Money comes into local communities largely from exportation of labor to external markets and leaves communities through purchases of imports. If these external markets, falter, or have any seasonality this drastically effects the amount of money available for trade in a local community.

Lack of Money: The money supply is not sufficient to trade available goods and services.

Lack of Investment: Given a chronically non-liquid market nearly all available money goes toward basic needs and consumption of imported goods. Money is not saved as much as it could be, and the mechanisms for savings are difficult. Investment comes with interest bearing debt.

Capital Ownership: Cooperative development can help low-income groups pool resources and develop local industries. (Competing for scare resources)

Lack of local industries: Over dependence on imports causes money to leave local system. Exporting the majority of labor is inefficient - labor should be utilized and products created for local consumption and export. Rather than tapping the local labor force and building new businesses, the majority of local businesses only sell retail goods to these workers.

===Differences in Characteristics of Money===

Characteristics of Money:

• durability
• portability
• divisibility
• uniformity
• limited supply
• acceptability

Characteristics of Community Currency:

• Backed by local value
• Non
• Interest Bearing and Non-Inflationary
• Supportive of local industries and cooperatives
• Building local identity and trust
• Providing market stability Free to use and develop Community issued and regional in usage

Theory of Change

Mutual Credit: (The term implies that creditors and debtors are the same people lending to each other)

The practice of multilateral exchange can be a mere convenience, but once a common unit of account is agreed, the extent to which members can draw credit limited, a mutual credit system quickly resembles a money system.

Keynes proposed a mutual credit system called International Clearing Union instead of a gold standard.

Theory of Change ----> Growing Local Production Through Liquidity Injection