* Book: People Money - the Promise of Regional Currencies. By Margrit Kennedy and Bernard Lietaer. Triarchy Press, 2012

'People Money' is the first English edition of Margrit Kennedy's and Bernard Lietaer's 2004 German book 'Regionalwährungen'.

Description

John Rogers:

"We took the opportunity of the first English edition to completely update and expand the book to include profiles of regional currencies around the world: Banco Palmas, WIR Bank, Brixton Pound, BerkShares, Chiemgauer, Equal Dollars etc. The portraits are based on interviews with 40 local currency organisers, which we think plugs a gap in the literature to date and adds valuable new evidence about the potential of these systems."

Excerpts

Introduction

"The global financial crisis that began in 2007 is not the first. Researchers at the International Monetary Fund identified 124 systemic banking crises, 208 currency crises and 63 episodes of sovereign debt defaults between 1970 and 2010. And in the previous 300 years there were 48 major crashes. Listening to the daily news, it seems like crisis is normal and permanent. But the causes are systemic and systemic causes require systemic solutions.

In 2003, Margrit Kennedy and Bernard Lietaer discovered that they both wanted to write a book about the possibilities and advantages of creating regional currencies. They were happily surprised to learn that each of them already had very concrete ideas why the introduction of this type of money would make sense in the near future. They also found out that their experiences with local currencies and knowledge of historical examples were quite different and that it made sense to write this book together.

Margrit had already featured alternative money systems in her first book ‘Inflation and Interest Free Money’ in 1987; Bernard had introduced the term ‘complementary currencies’ in ‘The Future of Money’ in 1999 and was friends with historians of coinage, who had discovered many coins from the middle ages to the industrial revolution that acted as regional currencies on a large scale across Europe. On her travels in Europe and the Americas, Margrit had discovered many different local efforts to develop new ways of using money, like the Swedish JAK Bank, the Swiss WIR Bank, the Argentinian Credito and numerous Local Exchange Trading Systems, all of which showed that complementary currencies could be of enormous help to the people who use them.

Before Margrit and Bernard were able to finish the book, the word had spread in Germany about their plans to publish a book on this topic. Twenty-four initiators from various parts of Germany, who were thinking of implementing regional currencies, began to ask for more information on how to proceed. Neither Margrit nor Bernard knew exactly how to go about it, as neither of them had encountered an example of a regional currency that met all their criteria, so they organized a meeting of all those interested in creating regional currencies to discuss the various options. There was a lively exchange of experiences and expectations at this first meeting, which inspired everyone to set up the Regiogeld e.V (Regional Money Association p.XX), representing regional money systems across Germany.

The resulting book was published in 2004 by Riemann, Munich , and became something of a handbook for the first German models. It was later translated into French and Spanish .

John Rogers was invited to update and edit the original book for this first English edition.

Part One: The Case for Regional Currencies contains the essence of the original book and Part Two: Regional Currencies in Practice features portraits of local systems around the world, selected from interviews with 40 organisers and promoters, reflecting the great variety of current practice. This evidence gives a new impulse and credibility to the concept and helps those who feel compelled to follow in the footsteps of the first initiators to learn from their often challenging experiences.

All three authors wish to salute the courage, ingenuity and perseverance of those local currency pioneers who have shown the way. In particular, thanks to all of the local organisers and support agencies who gave generously of their time to do interviews and correct mistakes in the text for this book. Apologies for any mistakes that remain and if we have overlooked anyone who should have been included. Tell us who you are and we will include you in the next edition.

A personal thank you from Margrit and Bernard to our life partners who support our work: Declan Kennedy and Jacqui Dunne, who by chance were born in the same hospital in Dublin, and whose Irish humour and wonderful ability to tell stories continue to inspire us to fill our visions with life and our life with visions. John would like to dedicate the book to the memory of Eluned, who insisted he get started with local currencies, and to Sitara who cheerfully puts up with his obsession.

Up to now, most regional currencies have been initiated by citizens and businesses. Regional and city governments are starting to join them as they search for innovative solutions to the range and scale of problems facing them. We hope that this book will provide enough information and inspiration to local governments, businesses and citizens to try out bold new experiments that put regional currencies back on the map for a long time to come."

The Importance of Regions in a Globalized World

Regional development – a global phenomenon

"One of the interesting effects of globalisation is that people tend to identify themselves more with smaller and oversee-able structures, with their distinctive local regions, communities and cultures. On every continent there are regional development movements, that recognise there is an appropriate scale for our social and economic exchanges.

There are detailed debates between economic development specialists over the best approaches for longterm regional growth. More or less protectionism or market incentives? More or less direct intervention and subsidies? More or less decentralisation and political empowerment of the regions?

It is not the subject of this book to look in detail at regional policies but to recommend a tool that supports existing efforts to balance local growth with participation in global markets: regional currencies.

Making decisions at the right level

Another controversial word is ‘subsidiarity’. It is a simple principle: issues should be dealt with at the lowest possible organizational level. So international bodies should deal with issues affecting the global commons like climate change and environmental damage; national governments should deal with organising and funding education, healthcare and defence; state, regional and local governments should deal with all other matters that directly affect their level.

This principle is enshrined in the Tenth Amendment to the US Constitution of 1791, that asserts States rights, and in European Law through the Maastricht Treaty of 1992. It is out of this principle that some of the most successful European initiatives have arisen, including European funding to encourage and support the weaker areas of the Union.

Global problems, regional solutions

During the 21st century we are already dealing with a range of issues that are unprecedented in their complexity, their universality, and their urgency: from climate change and environmental degradation to systemic unemployment with the ending of the Industrial Age and the resulting crisis of meaning.

Even more predictable are the problems that will arise from a population aging on an unprecedented scale. Our entire social contract around jobs, retirement and pensions has been based on a population distribution in which many workers are paying for the pensions of a few retirees. In the 1960s, only one out of eleven people in the OECD countries were 65 or older. Today, one out of seven has reached that hallowed age, and by 2030, it will be one out of four! How will the pensions and healthcare costs be taken care of as this grey demographic wave is being played out?

The Bank of International Settlements prepared a thorough study entitled The Future of Public Debt: Prospects and Implications that is highly relevant. The BIS’s baseline scenario assumes that total government revenue and non-age-related spending remain a constant percentage of GDP and that real interest rates remain unchanged from the historically low levels of the 1998-2007 average. Both these hypotheses should be considered optimistic ones. Nevertheless, in this baseline scenario, debt/GDP ratios rise rapidly in the coming decade, exceeding 300% of GDP in Japan, 200% in the United Kingdom and 150% in Belgium, France, Ireland, Greece, Italy and the United States. In the longer term, the situation grows even more unmanageable: by 2040 the projected debt/GDP ratios for all these countries range from 300 to 600%! Similarly, the fraction absorbed by interest payments in each of these countries points to the same conclusion: from around 5% today, these numbers rise continuously to above 10% in all cases and climb as high as 27% in the United Kingdom. Some fundamental change will obviously happen before these projections become reality.

The BIS study states:

As frightening as it is to consider public debt increasing to more than 100% of GDP, an even greater danger arises from a rapidly ageing population. The related unfunded liabilities are large and growing, and should be a central part of today’s long-term fiscal planning. It is essential that governments not be lulled into complacency by the ease with which they have financed their deficits thus far. In the aftermath of the financial crisis, the path of future output is likely to be permanently below where we thought it would be just several years ago. As a result, government revenues will be lower and expenditures higher, making consolidation even more difficult. The recent sharp rise in risk premiums on long-term bonds issued by several industrial countries suggests that markets no longer consider sovereign debt low-risk.

The end of cheap energy or ‘peak oil’ is another mega-trend that challenges both citizens and policy makers to action. The resulting rise in energy costs and transportation will force an overhaul of our entire global economic system, in favour of more autonomous regional development.

Yet the main institutional tool to deal with all these issues has remained the one inherited from previous centuries: the nation state. Even the global level is addressed institutionally mainly through the United Nations. A number of the decisions that are currently being made at the national level, simply don’t belong there and will turn out to be ineffective if kept there. Many social issues such as ecological repair, elder- or child-care, youth mentoring, or unemployment could be addressed by initiatives taken at the regional level. For instance, it is a lot less disruptive - socially, culturally and economically - to move jobs to where the people already live, rather than obliging masses of people to move to where new jobs are being created.

Stronger regional initiatives do not replace national government action where that is appropriate but they complement and enhance national policies. This idea in itself isn’t new but regional currencies enable regions to mobilize their own resources to address those issues, without burdening taxpayers either at the national or regional level. Regional currencies, if developed and supported at the right scale, could re-launch regional economies without incurring deficit spending at either the central or the regional level.

The importance of this policy option becomes clear only when we broaden our horizons to understand the nature of our current economic crisis. It is not just another downturn in the business cycle but a full-scale historical shift from one age to another. The over-hyped ‘Information Age’ or ‘Knowledge-Based Society’ means that information itself has become a critical economic asset in global markets. Organising and sharing information about human and social capital during this structural shift can lead us to a culture of sustainable abundance.

The last time that a shift of such a magnitude occurred was when the Industrial Age precipitated the end of the Agrarian Age. Such shifts are not painless: look at what happened to the farmers when the agrarian age was ending; or to the landed gentry that saw their values, power and traditions fade into irrelevancy.

There is also one major obstacle to be overcome for us to successfully explore the regional development option. It is what we call the ‘money blind spot’, a blind spot shared with almost everybody in our modern age. Many people may agree with the idea that more regional autonomy would be a good thing; but when we show that a necessary condition for such a strategy is the creation of regional currencies operating in parallel with national currencies, it will be seen that a whole different set of issues arises. And we will see that far from being a contradiction, strong national or trans-national currencies like the Dollar and the Euro make regional currencies even more useful and necessary than before."

More Information

Promise of Regional Currencies

Contents