Regional Currency

Varieties

http://www.globalideasbank.org/site/bank/idea.php?ideaId=904

http://www.bis.org/publ/bppdf/bispap17.htm

http://www.openwriting.com/archives/2011/01/regional_curren_1.php

Many regions have the paradoxical combination of unemployment and too few people doing what needs to be done. It is a tragedy that in communities with large-scale unemployment, money poured in tends to pour out again.

It would be worth experimenting in one devastated region, with a co-existing alternative currency that was not legal outside the region or in banking transactions, but was designed purely for the exchange of local goods and services, and commenced with say $5 for every inhabitant 18 or over. Would it increase inflation? Would it run into a sink? Would some-one collect it all as ticket-money for a football match (but would then have to use it all in the community)?

Or would more people be able to employ more fellow locals in repairs and services and products that would not otherwise be available or that could not compete with imports? Could those who could not provide services or goods still retain their part of the circulation through the uses local authorities and agencies made of contributions to them paid in part in local currency?

This proposal reinforces the concept of community as an extension of one’s individual ego. Working for the local community produces benefits for oneself that are visible – but for too many people working for a company is viewed as being exploited for the sake of profits by distant and even overseas faceless shareholders. Reverse the cry, ‘Look how the government is letting me rot,’ to a cry ‘I am not going to let anyone rot me’ and this is a surer route for the instinct of self-preservation.

People all operated on subsistence economies once. We now have the know-how to know what can be operated at the local level and on a small scale with an overall greater efficiency, and we know about Future Cost sustainability, and what is the really useful contribution of mass production and international and national distribution.

The arithmetic of most service industries is difficult – how the server can be paid the served without the served having a greater discrepancy in earnings. How can a service given such as child-rearing be given a value when it is not visible or related to the cost of raw materials?

Extension of services within a community can be extended further, rather than cut, to provide employment that improves the quality of life in a community just as much, or more than, raising the standard of living to buy more imported expensive throwaways.

Local economics is possible, while a community is at the same time also participating in national economics, with banks, supermarkets and imports of what cannot reasonably be supplied in the region.

This experiment should be tried first in a region of say 50,000 people which has some potential in natural resources and local know-how to have some prospect of succeeding. Only later can it be extended to an apparently hopeless region with a long-helpless populace.

It would depend on a form of currency that was recognizable, not forgeable, and put out by the government printer. The possibilities of rorting and scamming should be thought out beforehand, to prevent them.

The regional currency is only small-scale. Most of the region’s dealings are carried out in the national currency. But the regional currency has the ability to act as money has been supposed to act, as a means of exchange of goods and services, without anyone ‘making money’ from the operation. It enables the poorest at least to have $5 to spend to get something fixed, and to be able to earn $5. The costs of more than $5 worth are paid in national currency.

The cost of such a scheme? Design and production of 50,000 notes, with good publicity for the people of the region to know what it was for, and how to use it without abuse of it. At the end of three years, if the experiment was a failure for any reason, such as the money running into sinks, the government would have to be willing to stump up $250,000 to buy the notes back from whoever had them. This assurance of government backing would be essential. Alternatively a philanthropic billionaire or even a mere millionaire who liked gambling, could invest the $300,000 to see what would happen. That is hardly the roll of a dice. But if it was a success, it could be allowed another three years before looking at it again, then another three years . .

Examples of how people could spend their $5 - people carrying out services, mending things, making things, buying materials to make things, fresh food grown in the area, paying agricultural labor, cooking, cleaning, pocket money for older children, paying for local government services.

It would not be legal currency in shops which carried imported goods, alcohol or cigarettes, garages, banks or gambling. If all it meant was that someone charged the population $5 to see a football match, that would run the money into a sink.

A joke going round the emails runs like this

Ît's a slow day in a dusty little Australian town. The sun is beating down and the streets are
 deserted. Times are tough, everybody is in debt, and everybody lives on
 credit. 

 On this particular day a rich tourist from down south is driving
 through town, stops at the local motel and lays a $100 bill on the desk
 saying he wants to inspect the rooms upstairs in order
 to pick one to spend the night. 

 The owner gives the visitor keys to a few rooms and as soon as the man walks
 upstairs, the owner grabs the $100 bill and runs next door to pay his
 debt to the butcher. 

 The butcher takes the $100 and runs down the street to repay his
 debt to the pig farmer. 

The pig farmer takes the $100 and heads off to pay his bill at
 the supplier of feed and fuel. 
 The guy at the Farmer's Co-op takes the $100 and runs to pay his
 drinks bill at the local pub. The publican slips the money along to the local prostitute drinking
 at the bar, who has also been facing hard times and has had to offer him "services" on credit. She rushes to the motel and pays off her room bill to
 the motel owner with the $100. The motel proprietor then places the $100 back on the counter so the rich traveler will not suspect anything. 

 At that moment the traveler comes down the stairs, picks up the
 $100 bill, states that the rooms are not satisfactory, pockets the money, and leaves town. No one produced anything. No one earned anything. However, the whole town is now out of debt and looking to the
 future
 with a lot more optimism. And that, ladies and gentlemen, is how a Government 
stimulus package works.

A comparison can also be made with the Grameen system of loans to poor women to start a business, which however involves larger individual sums than this form of ‘regional currency’.