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Complementary currencies for sustainable development - theories and practices – Miguel Yasuyuki Hirota

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1 Complementary currencies for sustainable development - theories and practices – Miguel Yasuyuki Hirota June 2008

2 Todays topic Why is todays socioeconomic system unsustainable and unfair? Why is todays socioeconomic system unsustainable and unfair? Required features for our monetary system to promote the sustainable and fair development Required features for our monetary system to promote the sustainable and fair development Experiences in the world Experiences in the world Conclusion / Questions Conclusion / Questions

3 Todays topic Why is todays socioeconomic system unsustainable and unfair? Why is todays socioeconomic system unsustainable and unfair? Required features for our monetary system to promote the sustainable and fair development Required features for our monetary system to promote the sustainable and fair development Experiences in the world Experiences in the world Conclusion / Questions Conclusion / Questions

4 Why is todays socioeconomic system unsustainable and unfair? Issued only by the central bank when asked by commercial banks: no community, region or even country can self-regulate their means of exchange > Mexico (1994) Asia (1997) Russia (1998) Argentina (2001)… Issued only by the central bank when asked by commercial banks: no community, region or even country can self-regulate their means of exchange > Mexico (1994) Asia (1997) Russia (1998) Argentina (2001)… Ex: The Bank of Japan, free from any political intervention, can implement whatever policy they like without being questioned (R. Werner, The Princes of Yen, 2003) Ex: The Bank of Japan, free from any political intervention, can implement whatever policy they like without being questioned (R. Werner, The Princes of Yen, 2003) Enriches only the rich at the cost of the poor: unfair redistribution of wealth for most of the population by way of interest / impoverishment of the middle-class once the national economy stops growing Enriches only the rich at the cost of the poor: unfair redistribution of wealth for most of the population by way of interest / impoverishment of the middle-class once the national economy stops growing Difficulty for long-term sustainable projects (such as environment, education) to be invested: only short-term businesses prosper at the cost of human resources and our ecosystem (natural and social capital, so to say) Difficulty for long-term sustainable projects (such as environment, education) to be invested: only short-term businesses prosper at the cost of human resources and our ecosystem (natural and social capital, so to say) US$ backed by oil as standard: favourable for US, economic collapse when the oil runs out US$ backed by oil as standard: favourable for US, economic collapse when the oil runs out

5 Even George Soros admits International trade and global financial markets are very good at generating wealth, but they cannot take care of other social needs, such as the preservation of peace, alleviation of poverty, protection of the environment, labor conditions, or human rights – what are generally called public goods (George Soros, On Globalization, 2003) International trade and global financial markets are very good at generating wealth, but they cannot take care of other social needs, such as the preservation of peace, alleviation of poverty, protection of the environment, labor conditions, or human rights – what are generally called public goods (George Soros, On Globalization, 2003)

6 Should national economies grow forever? A: growth of all natural beings A: growth of all natural beings C: growth of cancer and what the current monetary system demands C: growth of cancer and what the current monetary system demands Our current economic system is destined to eat up all the natural resources of this precious planet Our current economic system is destined to eat up all the natural resources of this precious planet Source: Kennedy (cf. next slide) Source: Kennedy (cf. next slide)

7 Redistribution of wealth in favour of the rich Most peoples income shrinks in todays monetary system while a small number of rich gets even wealthier Most peoples income shrinks in todays monetary system while a small number of rich gets even wealthier Source: Inflation and interest-free money (Margrit Kennedy, berlin.de/~roehrigw/kenn edy/english/ ) Source: Inflation and interest-free money (Margrit Kennedy, berlin.de/~roehrigw/kenn edy/english/ )

8 Todays financial system in favour of short-time investments Source: Source:

9 Todays topic Why is todays socioeconomic system unsustainable and unfair? Why is todays socioeconomic system unsustainable and unfair? Required features for our monetary system to promote the sustainable and fair development Required features for our monetary system to promote the sustainable and fair development Experiences in the world Experiences in the world Conclusion / Questions Conclusion / Questions

10 What is money? Everybody know what we can with money, but nobody knows what money is. Everybody know what we can with money, but nobody knows what money is. The agreement within a community to use something as a means of exchange (Bernard Lietaer, The Future of Money) The agreement within a community to use something as a means of exchange (Bernard Lietaer, The Future of Money) Agreement = Rule Agreement = Rule So we can change our money system and/or have parallel systems if we arent happy with the conventional one So we can change our money system and/or have parallel systems if we arent happy with the conventional one

11 Required features for sustainable and fair Yin currencies Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (Brundlandt Report, UN, 1986) Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (Brundlandt Report, UN, 1986) Promotion of natural energy (solar, windmills, geothermal, biomass…) and other eco-friendly and/or social projects (reforestation, irrigation, education, healthcare…) Promotion of natural energy (solar, windmills, geothermal, biomass…) and other eco-friendly and/or social projects (reforestation, irrigation, education, healthcare…) Democratically-managed by its users to prevent financial meltdown by outer agents and to promote the fair distribution of wealth Democratically-managed by its users to prevent financial meltdown by outer agents and to promote the fair distribution of wealth Stimulate the growth of third sector (social economy), balancing Yin and Yang in our society Stimulate the growth of third sector (social economy), balancing Yin and Yang in our society

12 Yin and Yang coherences Conv. Money CCSs Competition Having, Doing Peak Experience Logic, Linear Technology dominates Bigger is better, Expansion Hierarchy works best Central Authority Transcendent GodCooperationBeingEndurance-sustainability Paradoxical, Non-linear Interpersonal Skills Dominate Small is Beautiful Egalitarian Works Best Mutual Trust Immanent Divinity Male principles Female principles Yang coherence Yin coherence Source: The Future of Money(Bernard Lietaer, Century,2001) Source: The Future of Money(Bernard Lietaer, Century,2001)

13 Todays topic Why is todays socioeconomic system unsustainable and unfair? Why is todays socioeconomic system unsustainable and unfair? Required features for our monetary system to promote the sustainable and fair development Required features for our monetary system to promote the sustainable and fair development Experiences in the world Experiences in the world Conclusion / Questions Conclusion / Questions

14 Traditional experiences in the world (– cir. 1995) LETS (Canada, Europe, NZ etc.): members trade in their own point system based on mutual trust LETS (Canada, Europe, NZ etc.): members trade in their own point system based on mutual trust Time Dollar / Time Bank (US, UK etc.): members help each other by providing daily services Time Dollar / Time Bank (US, UK etc.): members help each other by providing daily services Fureai Kippu (Japan): a group of grass-root initiatives to deposit hours of voluntary services to be withdrawn when needed Fureai Kippu (Japan): a group of grass-root initiatives to deposit hours of voluntary services to be withdrawn when needed WIR Bank (Switzerland): founded in 1934 to boost small corporations, realising more than 1 billion Swiss Francs of trades per annum WIR Bank (Switzerland): founded in 1934 to boost small corporations, realising more than 1 billion Swiss Francs of trades per annum

15 LETS (different countries) Started in 1982 by Michael Linton at Commox Valley, British Columbia, Canada, then spread into other countries (UK, Australia, NZ, contiental Europe etc) Started in 1982 by Michael Linton at Commox Valley, British Columbia, Canada, then spread into other countries (UK, Australia, NZ, contiental Europe etc) Called SEL (Systèmes déchanges locaux) in France and Tauschringe in Germany Called SEL (Systèmes déchanges locaux) in France and Tauschringe in Germany Members exchange goods and/or services and pay in LETS points (see next slides) Members exchange goods and/or services and pay in LETS points (see next slides) The total sum of all accounts is always zero The total sum of all accounts is always zero Appropriate for transactions between individuals at small communities (a few hundreds of people) or districts in urban areas Appropriate for transactions between individuals at small communities (a few hundreds of people) or districts in urban areas etc. etc.

16 LETS (different countries) On 08 January Andy gives Betty 5 kilos of potatoes and receives 10 points On 08 January Andy gives Betty 5 kilos of potatoes and receives 10 points NamePrevious amount ChangeCurrent amount Andy0+10 Betty0-10 Charly000 Total000

17 LETS (different countries) Attention: the total sum of all accounts is always zero Attention: the total sum of all accounts is always zero NamePrevious amount ChangeCurrent amount Andy0+10 Betty0-10 Charly000 Total000

18 LETS (different countries) On 13 January Betty gives Charly her cakes and receives 15 points On 13 January Betty gives Charly her cakes and receives 15 points NamePrevious amount ChangeCurrent amount Andy+100 Betty Charly0-15 Total000

19 LETS (different countries) On 17 January Charly sells Andy his books and receives 25 points On 17 January Charly sells Andy his books and receives 25 points NamePrevious amount ChangeCurrent amount Andy Betty+50 Charly Total000

20 Examples of LETS Hanbat LETS (Daejeon, South Korea): founded in 2000 with more than 4,000 trades (more than US$100,000) annually. Hanbat LETS (Daejeon, South Korea): founded in 2000 with more than 4,000 trades (more than US$100,000) annually. CES (Cape Town, South Africa etc.): an online clearing system of LETS, operational in 10 countries. CES (Cape Town, South Africa etc.): an online clearing system of LETS, operational in 10 countries.

21 Time Dollar & Timebank (US, UK etc.) Started in Washington D.C., US by a lawyer Edgar Cahn as a means to promote social justice Started in Washington D.C., US by a lawyer Edgar Cahn as a means to promote social justice Members help each other and those who help others receive hours to be spent when they want some help from others – Improvement of quality of life for a wide range of people Members help each other and those who help others receive hours to be spent when they want some help from others – Improvement of quality of life for a wide range of people Cooperation with other businesses has enabled this system to achieve different goals Cooperation with other businesses has enabled this system to achieve different goals United States: United States: United Kingdom: United Kingdom: Spain: Spain: Chile: Chile:

22 Fureai Kippu (Japan) Started in 1970s by housewives as a local network of mutual help Started in 1970s by housewives as a local network of mutual help Those who ask for help buy tickets (about US$6 per hour) and volunteers stock these hours and spend them when they need help (cooking, driving service etc.) Those who ask for help buy tickets (about US$6 per hour) and volunteers stock these hours and spend them when they need help (cooking, driving service etc.) Tickets are redeemable in yen, although usually below the minimum wage: help is more worthy than money for volunteers Tickets are redeemable in yen, although usually below the minimum wage: help is more worthy than money for volunteers Quite active until 2000 when the Public Care System for the Elderly was introduced Quite active until 2000 when the Public Care System for the Elderly was introduced

23 WIRBank, Switzerland A B2B CC system since 1934 in the Switzerland A B2B CC system since 1934 in the Switzerland SMEs make a loan in WIR instead of CHF, since the interest rate for loans in WIR is lower than those in CHF SMEs make a loan in WIR instead of CHF, since the interest rate for loans in WIR is lower than those in CHF WIR is only accepted by Swiss SMEs / retaining the purchasing power within their own business circle (not out into multinationals or into neighbouring countries) WIR is only accepted by Swiss SMEs / retaining the purchasing power within their own business circle (not out into multinationals or into neighbouring countries) WIRBank as a cooperative: member companies can control WIRBank WIRBank as a cooperative: member companies can control WIRBank

24 Recent initiatives (since 1995-) Barter Clubs (Argentina): once the biggest CC movement in the world Barter Clubs (Argentina): once the biggest CC movement in the world Banco Palmas (Brazil): a community bank which gives microcredits in their own complementary currency Banco Palmas (Brazil): a community bank which gives microcredits in their own complementary currency REGIO (Germany): some 30 initiatives in practice, dealing with a region (some counties, for instance) and stimulating the regional economy REGIO (Germany): some 30 initiatives in practice, dealing with a region (some counties, for instance) and stimulating the regional economy SOL Project (France): to promote the social economy SOL Project (France): to promote the social economy Banca Etica(Italy): a bank which gives loans exclusively to social and eco-friendly projects Banca Etica(Italy): a bank which gives loans exclusively to social and eco-friendly projects Strohalm: a Dutch NGO which has been implementing different initiatives especially in Europe and Latin America. Strohalm: a Dutch NGO which has been implementing different initiatives especially in Europe and Latin America. Only a tip of the iceberg: more interesting initiatives can be found all over the world Only a tip of the iceberg: more interesting initiatives can be found all over the world

25 Barter Clubs, Argentina The biggest complementary currency system ever had in the world The biggest complementary currency system ever had in the world A barter club in the suburb of Buenos Aires in May 1995 with 23 members grew into a huge national network of thousands of clubs with 6 million people (1 out of 6 Argentineans at that period) made ends meet during the national crisis in A barter club in the suburb of Buenos Aires in May 1995 with 23 members grew into a huge national network of thousands of clubs with 6 million people (1 out of 6 Argentineans at that period) made ends meet during the national crisis in The mismanagement of the credit (their complementary currency), however, led to a severe inflation and most people left it, although some 40,000 to 50,000 still go on exchanging The mismanagement of the credit (their complementary currency), however, led to a severe inflation and most people left it, although some 40,000 to 50,000 still go on exchanging Some initiatives to revive this movement Some initiatives to revive this movement

26 Banco Palmas, Brazil A community bank in Fortaleza, Ceará, Brazil since 1998 which gives microcredits in its complementary currency A community bank in Fortaleza, Ceará, Brazil since 1998 which gives microcredits in its complementary currency Interest rates on microcredits are much lower than the one in real (Brazils currency), enabling people with limited income to start up their own business Interest rates on microcredits are much lower than the one in real (Brazils currency), enabling people with limited income to start up their own business 1200 jobs have been created thanks to this system 1200 jobs have been created thanks to this system

27 Chiemgauer, Germany One of some 30 REGIO (regional currencies) projects throughout Germany/Austria One of some 30 REGIO (regional currencies) projects throughout Germany/Austria -backed vouchers that circulate within the region to stimulate small businesses and the regional economy -backed vouchers that circulate within the region to stimulate small businesses and the regional economy Started by female high-school students with their professor in Jan 2003, with now 1300 individual and 600 business members Started by female high-school students with their professor in Jan 2003, with now 1300 individual and 600 business members More than C210,000 (=210,000) in circulation, increasing local businesses turnover More than C210,000 (=210,000) in circulation, increasing local businesses turnover Redeemable in euro but with 5% commission: 2% for the administrative cost and 3% for non-profits Redeemable in euro but with 5% commission: 2% for the administrative cost and 3% for non-profits ATM service is available too ATM service is available too

28 Chiemgauer, Germany 2 Chiemgauer bill, with 2% of demurrage each 3 months (to be referred to later) 2 Chiemgauer bill, with 2% of demurrage each 3 months (to be referred to later)

29 Chiemgauer, Germany Chiemgauer Cash Card Chiemgauer Cash Card

30 Chiemgauer, Germany Chiemgauers circulation (further on next slide) Chiemgauers circulation (further on next slide)

31 Chiemgauer, Germany How will it circulate? How will it circulate? 1: Chiemgauer office sells C100 at 97 euro to other non-profits 1: Chiemgauer office sells C100 at 97 euro to other non-profits 2: Local non-profits sell C100 at 100 euro to their members, earning 3 euro to be spent for their own activities 2: Local non-profits sell C100 at 100 euro to their members, earning 3 euro to be spent for their own activities 3: Consumers spend C100 instead of 100 euro at local businesses, donating indirectly 3 euro to the non-profit they support 3: Consumers spend C100 instead of 100 euro at local businesses, donating indirectly 3 euro to the non-profit they support 4: Local businesses spend C100 to other local businesses or redeem 95 euro, and the difference of 2 euro will be spent to cover the administrative cost of Chiemgauer office 4: Local businesses spend C100 to other local businesses or redeem 95 euro, and the difference of 2 euro will be spent to cover the administrative cost of Chiemgauer office

32 Demurrage Suggested by Silvio Gesell ( ), a German entrepreneur and economist who found out the unfairness of the current monetary system Suggested by Silvio Gesell ( ), a German entrepreneur and economist who found out the unfairness of the current monetary system US$100 note is much more preferred to equivalent apples as money is free from degradation US$100 note is much more preferred to equivalent apples as money is free from degradation So abolish the privilege of money by making it gradually perishable > demurrage So abolish the privilege of money by making it gradually perishable > demurrage Masterpiece: The Natural Economic Order (1916), with the whole text available online at: o/index.htm Masterpiece: The Natural Economic Order (1916), with the whole text available online at: o/index.htm

33 Wörgl, Austria Local currency (LC) issued by the mayor Michael Unterguggenberger in July 1932: during the Great Depression Local currency (LC) issued by the mayor Michael Unterguggenberger in July 1932: during the Great Depression Holders of LC charged of demurrage fee Holders of LC charged of demurrage fee LCs quick circulation reactivated local trades and people even tried to pay their tax in advance LCs quick circulation reactivated local trades and people even tried to pay their tax in advance So successful economically, though, that the Austrian Central Bank, fearing to lose its grip over its national currency, stopped it in Sep 1933 So successful economically, though, that the Austrian Central Bank, fearing to lose its grip over its national currency, stopped it in Sep 1933 Similar cases occurred in the past (up to 1950s) in Germany and France, being finished by force by the central governments Similar cases occurred in the past (up to 1950s) in Germany and France, being finished by force by the central governments

34 Wörgl, Austria Michael Unterguggenbergers Monument next to the City Hall Michael Unterguggenbergers Monument next to the City Hall

35 Wörgl, Austria Ms. Veronika Spielbichler (Unterguggenberger Institute, Wörgl) with a copy of the LC Ms. Veronika Spielbichler (Unterguggenberger Institute, Wörgl) with a copy of the LC

36 SOL project (France) SOL Coopération, SOL engagement and SOL affecté: to promote the social economy SOL Coopération, SOL engagement and SOL affecté: to promote the social economy SOL Coopération: similar to the loyalty programme but with the aim to promote social or eco-friendly enterprises (B2C an B2B) SOL Coopération: similar to the loyalty programme but with the aim to promote social or eco-friendly enterprises (B2C an B2B) SOL Engagement: promotes voluntary activities by giving them some SOL points SOL Engagement: promotes voluntary activities by giving them some SOL points SOL points suffer from the demurrage, encouraging users to spend them instead of saving SOL points suffer from the demurrage, encouraging users to spend them instead of saving

37 Banca Etica, Italy Founded in 1999 in Padua to finance non- profits and cooperatives which otherwise wouldnt get loans Founded in 1999 in Padua to finance non- profits and cooperatives which otherwise wouldnt get loans Savers choose one of four domains for their money to be invested: 1. social co-operation, 2. eco-friendly projects, 3. developing countries, 4. cultural events Savers choose one of four domains for their money to be invested: 1. social co-operation, 2. eco-friendly projects, 3. developing countries, 4. cultural events Savers can also lower their interest rate Savers can also lower their interest rate Finances some 375 million to 2571 entities Finances some 375 million to 2571 entities In close relationship with INAISE, FEBEA, SEFEA and other entities In close relationship with INAISE, FEBEA, SEFEA and other entities

38 Banca Etica, Italy Projects which have so far got BEs loan Projects which have so far got BEs loan Fair trade for a Honduran coffee cooperative Fair trade for a Honduran coffee cooperative Reconstruction of a historic district in Riace, Southern Italy Reconstruction of a historic district in Riace, Southern Italy Organic farm by a Benedictine monastery Organic farm by a Benedictine monastery Organic farming to lessen peoples dependency on the underground economy Organic farming to lessen peoples dependency on the underground economy Support for drug-addicted Support for drug-addicted Health-care support system for prostitutes Health-care support system for prostitutes Economic aid to Albania Economic aid to Albania

39 Todays topic Why is todays socioeconomic system unsustainable and unfair? Why is todays socioeconomic system unsustainable and unfair? Required features for our monetary system to promote the sustainable and fair development Required features for our monetary system to promote the sustainable and fair development Experiences in the world Experiences in the world Conclusion / Questions Conclusion / Questions

40 Conclusion Our very monetary system has several structural defaults and is unsustainable Our very monetary system has several structural defaults and is unsustainable It is Yang-oriented It is Yang-oriented Complementary currencies: tool to promote Yin principles to balance our society Complementary currencies: tool to promote Yin principles to balance our society Different systems all over the world, each one in accordance with the communitys needs Different systems all over the world, each one in accordance with the communitys needs

41 Questions 1/4 1. What is/are your complementary currencys goal(s) ? 1. What is/are your complementary currencys goal(s) ? 2. What sorts of demands remain unsatisfied in your community / region / country? 2. What sorts of demands remain unsatisfied in your community / region / country? 3. What unused resources are available? 3. What unused resources are available? 4. What kind of improvements can be expected by using complementary currencies? 4. What kind of improvements can be expected by using complementary currencies? 5. Who will be the most interested in complementary currencies? 5. Who will be the most interested in complementary currencies? More info: community.org/cgi/gc/scan/fi=news_stories/st=db/sf=co de/se=25/sp=stories.html More info: community.org/cgi/gc/scan/fi=news_stories/st=db/sf=co de/se=25/sp=stories.html

42 Questions 2/4 Who will be the members of the start-up project team ? Who will be the members of the start-up project team ?

43 Questions 3/4 1. What means will you use? commodities / bills, coins / cheques / electronic currency / some of them 1. What means will you use? commodities / bills, coins / cheques / electronic currency / some of them 2. What is the unit of your currency? legal tender / time / other goods 2. What is the unit of your currency? legal tender / time / other goods 3. How will the complementary currency be issued? (in exchange for legal tender / backed with food / giveaway to all members / backed wit other goods / mutual trust) 3. How will the complementary currency be issued? (in exchange for legal tender / backed with food / giveaway to all members / backed wit other goods / mutual trust) 4. How will the administrative cost be paid? (Subsidy / membership fee / transaction fee / interest on loan / demurrage 4. How will the administrative cost be paid? (Subsidy / membership fee / transaction fee / interest on loan / demurrage

44 Questions 4/4 Draw a chart like this Draw a chart like this

45 Further reading The Future of Money (Bernard Lietaer, Century, 2000) The Future of Money (Bernard Lietaer, Century, 2000) Interest and Inflation-free Money (Margrit Kennedy) available at: Interest and Inflation-free Money (Margrit Kennedy) available at: Money: Understanding and Creating Alternatives to Legal Tender (Thomas Greco, Chelsea Green Publishing Company, 2001) Money: Understanding and Creating Alternatives to Legal Tender (Thomas Greco, Chelsea Green Publishing Company, 2001) The Ecology of Money (Richard Douthwaite, Green Books, 2000) The Ecology of Money (Richard Douthwaite, Green Books, 2000) No More Throw-Away People: The Co-Production Imperative (Edgar Cahn) No More Throw-Away People: The Co-Production Imperative (Edgar Cahn) Healthy Money, Healthy Planet (Deirdre Kent, Craig Potton, NZ, 2006) Healthy Money, Healthy Planet (Deirdre Kent, Craig Potton, NZ, 2006) The Princes of Yen(Richard Werner, M.E. Sharpe, 2003) The Princes of Yen(Richard Werner, M.E. Sharpe, 2003)

46 Related websites (Prof. Thomas Grecos official website) (Prof. Thomas Grecos official website) (more info about initiatives all over the world) (more info about initiatives all over the world) (a NZ trust) (a NZ trust) (a website for the conference which took place in Weimar, Germany in Sep 2006) (a website for the conference which took place in Weimar, Germany in Sep 2006) (where the Community Currency Guide is available for free) (where the Community Currency Guide is available for free) (a national association of Regio initiatives in Germany) (a national association of Regio initiatives in Germany) (a Dutch non-profit which works for the implementation of complementary currencies) (a Dutch non-profit which works for the implementation of complementary currencies)

47 Thank you very much for your attention. My My skype account: migjp2003 Website:


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