A different economy with different money

Inclusive Economy04 Jul 2013Georgina Gómez

Complementary and community currency allow members to insulate the local from the global economy, and give priority to local goods produced under organic and environmentally friendly practices.

There is more to money than most people think. Today, it is commonly seen as paper money issued and regulated by a central bank. Most people that use money would therefore accept the currency available to them in their countries. However, there are other options, as there have been throughout most of human history. Hundreds of groups all over the world are creating their own currencies to facilitate trade in their localities. This was the main topic of discussion at the 2nd International Conference on Community and Complementary Currencies that took place at the Institute of Social Studies (ISS) of Erasmus University Rotterdam in The Hague, between 19th and 23rd June. The conference brought together almost 500 participants from 31 countries, including academics, practitioners, consultants, policy-makers and representatives of grassroots organizations. The event closed with the question of whether there is a new social movement promoting the diversity of money that engages academic research, the creation of practical know-how and changes in economic activity. The organizers pointed out that a more sustainable economy, from an environmental as well as a financial point of view, may need to accept a rising diversity of currencies in the monetary system.

When creating a complementary currency system, its organizers make a number of important decisions, like who they invite to join – local government, local shops, or regular citizens only -, whether to use vouchers or an electronic accountancy system, whether to have regular markets or to keep trade virtual. Some schemes have strongly emancipatory discourses and practices and the participants seek to create ‘a human economy’ within the capitalist system, one which would be based on social networks and promote solidarity among members, strengthen the local economy through buying locally with local money, and promote a low-carbon economy.

Alternative currencies allow members to insulate the local from the global economy, and give priority to local goods produced under organic and environmentally friendly practices. In that sense, it is also a way to alleviate the effects of unemployment and poverty, which makes the scheme attractive in the present economic downturn. The unemployed often have skills and resources that they can use to generate some income, but their potential clients lack the money to pay for those goods and services. Two persons could potentially solve it by bartering, but the economic impact of that exchange would be extremely limited. If more people join, the choice of goods and services to trade would expand, as well as the potential number of customers who would buy. Creating a means of payment multiplies the options of goods and services to buy and sell at the local level and contributes to a more sustainable economy.

These are the ideas, at least, behind complementary currency systems. The practice is still incipient and most schemes still remain too small to make a difference in participants’ lives. Many such systems appear and die within a year, because people get discouraged by spending a lot of time in organizing and not being able to trade back what they have given to others. Spain and Greece are witnesses of this, but it seems to be changing. The present economic crisis is attracting considerable interest from local governments that see unofficial currencies as a means to reward citizens who care for the elderly or adopt more environmentally friendly behaviour. Some examples are the Makkie in Amsterdam East District, the former NU Pas in Rotterdam, or the Noppes network. Time banks are frequently sponsored by local governments and promote the exchange of working time between neighbours (“I do your laundry for 4 hours if you help me in for 4 hours at my kid’s birthday party”). They have a weaker emancipatory discourse but are the most widespread form because they provide a source of help and income to artists, old people, single parents and unemployed.

Other schemes work like a credit system at local level (Mary owes Wendy 50 points, who owes Joe 20 points and Mary another 60 points, and so on, until Wendy gets something worth 50 points). At the moment, the Bristol Pounds are the benchmark and received wide media coverage after the mayor announced he would be paid his salary in the unofficial currency, which can be used only in the Bristol area. In Spain about 50 groups have issued their own currencies and practically every month there is a new group seeking the support and know-how to start one. La Turuta in Barcelona, for example, has received support from the Catalonian government to promote a stronger local economy, as is the case of the Sol Violette in Toulouse, France.

While in Europe and North America schemes with unofficial currencies focus on promoting a more sustainable economy, in Latin America they are mainly seen as tools for income generation. In that sense, the Argentine case is the benchmark. In the 1999-2001 crisis there were 2.5 million users of community currencies and for many poor and disenfranchised middle class members, this was the only money available. It saved their lives and their lifestyle. Some of the groups organized their trade with unofficial money at neighbourhood and locality level, while others were structured within a region or province, and yet others were integrated in nationwide networks. The Argentine experiment with unofficial money started in 1995, grew exponentially together with unemployment, but faced a sharp decline with the crisis. It became the victim of hyperinflation and widespread forgery, allegedly supported by official banks and some members of the government, but was also crumbling under opportunistic behaviour, excess demand from users seeking insufficient necessities, and the mental and physical exhaustion of the organizers of a network that had become too big and unmanageable.

Brazil also is an active player and its community currencies are usually coupled with credit in unofficial money to run a micro-enterprise under individual or collective ownership. Wages are paid in complementary currency, which circulates in the community to pay for necessities like those produced by enterprises that operate in unofficial money. Banco Palmas, the first scheme in the city of Fortaleza, was almost suppressed by the Brazilian Central Bank, which considered that creating unofficial money was illegal. The grassroots organization successfully showed the jury that the users of the unofficial currency were landless and poor, and had never been served by the formal economy where official money circulated. Since they had always been excluded, they claimed the right to create another economy with unofficial currency, so that it would better respond to their needs and interests. They chose for a different economy with different money.

Some academic articles that were presented at the conference are posted at