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)
Characteristics
Key elements of a regional currency
Following are three commonly useful ‘building-blocks’ for a sustainable regional currency, based on many years of experience in various countries around the world.
1. A voucher system or circulating currency is used in the same way as conventional cash or current accounts for payment of small, everyday amounts of money. There are various designs: it can be valued at par with national currency (most systems that issue printed currency except Time Banks); it can be backed by the promise to supply goods and services (Ithaca HOURS p.XX); it can be redeemable for national currency (Chiemgauer p.XX, BerkShares p.XX, Brixton Pound p.XX), often for an exchange fee; it can be redeemable for rewards (Blaengarw Time Centre p.XX); it can be issued from an account in an exchange ring (Talente Tauschkreis Vorarlberg p.XX).
2. An exchange ring allows for the cash-free settlement of bills and the setting up of mutual credit lines between individuals and firms. It works best for small to medium enterprises, individuals and voluntary associations. It provides them with improved access to liquid funds or credit. See Talente Tauschkreis Vorarlberg (p.XX), WIR Bank (p.XX), The Business Exchange (p.XX), RES (p.XX) and Dane County Time Bank (p.XX).
3. A micro-credit bank offers low interest or interest free loans in both local and national currency for production or consumption. See Banco Palmas (p.XX), WIR Bank (p.XX), BerkShares (p.XX) and Chiemgauer (p.XX)." (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)
Directory
Margrit Kennedy et al.:
"If you click on the following map you can see where the emerging regional currencies are in one country, Germany: http://www.regiogeld.de/initiativen.html
This map shows all types of local currency around the world: http://complementarycurrency.org/ccDatabase/maps/worldmap.php
Africa
For thousands of years native Africans have supported themselves through gift economies and reciprocal exchanges. Europeans introduced national currencies in the 19th century in order to increase their control of local economies (p.XX) and the effect was to destroy local self-reliance. Now in the early 21st century Africans are beginning to experiment with local currencies to counter the dependency on national currencies: see interviews with Will Ruddick (p.X) in Kenya and Tim Jenkin in South Africa (p.X).
America (Central & South)
Central and South America have a strong tradition of ‘solidarity economy’ - mutual self-help rather than charitable assistance or paternal control - also based on old native traditions. Many local and regional currencies have emerged from this movement: see interviews with Carlos Louge in Argentina (p.X), Carlos de Freitas from Banco Palmas in Brazil (p.X) and Koen de Beer in X (p.X).
America (North)
Native Americans created interdependence through trade and used currencies like wampum beads and tobacco for hundreds of years. Colonial scrip currency helped the early European settlers reduce their dependency on Britain before the American Revolution but was regulated after US Independence and the creation of a Central Bank. Local ‘emergency’ currencies were issued in 1932/33 but were all outlawed by President Roosevelt (p.XX). Business exchange networks – Community Connect Trade (p.XX) – have developed since the 1960s and Time Banks – Dane County Time Bank (p.XX) and RHD (p.XX ) since the 1980s. Other models include Ithaca HOURS (p.XX) and BerkShares (p.X).
Canada is home to the original Local Exchange Trading System (LETS) and Community Way (p.XX); Calgary and Toronto Dollars; and Salt Spring Island Dollars, a currency for tourists.
Asia
Asia is a term introduced by Europeans to describe everywhere east of Istanbul!
With 60% of the world’s population, this continent includes the completely diverse cultures of Japan, India, China, Malaysia, Korea, Burma, Thailand, Vietnam and Sri Lanka.
Japan experienced a boom of experiments with local currencies between 1999 and 2003 but there are now very few working systems.
China’s centralised political system has made such local experiments impossible, although the old communist system of ‘work points’ that flourished from the 1950s to the 1970s was effectively a local currency system for rewarding local labour:
The system of work points gave enormous flexibility for making use of labour power in a whole range of productive activities over and above that required seasonally for agriculture. People got their work points, and therefore their share of their co-operative’s output and income at the end of the year, whatever activity they were engaged in. Such activities included building new infrastructure, schools, health centres, and the establishment of various village industries, such as equipment manufacture and repair, fertiliser production, and other value added and diversification activities. The system enabled some really gigantic projects, such as the construction of the Red Flag Canal in Linxian (now Linzhou township).
India has had a handful of local currencies, including a new experiment linking pedal power to Sun Money (p.XX).
South Korea experimented with local currencies in the wake of its 1998 financial crisis, including the high profile Hanbat LETS.
Cambodian Buddhist monks started some small scale LETS.
Australasia
Like other native cultures, the Aboriginals of Australia and the Maori of New Zealand have long established traditions of mutual help that form a background to modern experiments with local currencies.
In Australia the most popular form of currency is the Local Exchange Trading System (LETS), introduced in the late 1980s. The school based Maia Maia Project (p.XX) helps people to reduce CO2 emissions.
New Zealand has LETS, Time Banks and new initiatives backed by national currency: Wairarapa LETS, Lyttleton Time Bank, LOAVES Project.
Europe
Europeans in urban areas may be even less aware of their native cultures than inhabitants of other continents but most rural communities still preserve kinship and favours networks that are an unconscious model for modern local currencies.
Austria: Talente Tauschkreis, Vorarlberg (p.XX) and a national network of exchange rings
Belgium: RES (p.XX), Torekes and many LETS
England: LETS, Time Banks, Transition Town currencies: Totnes, Lewes, Brixton, Kidderminster, Bristol
France: 400 SEL (exchange rings), nine regional SOL currencies eg SOL Violette (p.XX)
Germany: National network of exchange rings; Regiogeld (regional currencies) - Bremen, Chiemgauer, Sterntaler etc.
Greece: local exchange rings emerging since the Euro crisis
Scotland: Business Exchange (p.XX)
Wales: Blaengarw Time Centre (p.XX)"
Source: The Promise of Regional Currencies