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Europe's Move To 'Complementary Currencies'
Citizen reporter Yasuyuki Hirota discusses new currency initiatives in Europe
Yasuyuki Hirota (internews)     Email Article  Print Article 
Published 2004-12-06 16:01 (KST)   
The Conference "Complementary Currencies in Europe" was held from July 18 to 22, 2004 at Katholisch Soziales Institut (KSI), Bad Honnef, Germany, where 160 people from 20 countries (including 6 from out of Europe) gathered to discuss this tool. Mr. Joachim Sikora, director at KSI, referred to the negative effects of neoliberalism, for instance the concentration of wealth and reduction of public service, suggesting the promotion of local production and consumption including energy. Different experiences in Europe were presented after another lecture by Dr. Margrit Kennedy (to whom I will refer later). CD-ROM on this event will be available soon and contact me for details.

Dr. Margrit Kennedy addresses the audience of the "Complementary Currencies" conference in Bad Honnef, Germany, last July.
©2004 Y. Hirota
The term "complementary currencies," coined by Bernard Lietaer (one of leading figures in this field), is used here as a tool to deal with structural faults of conventional currencies, for instance the monetary outflow from communities, transfer of factories from developed countries to developing ones (unemployment in richer ones) and suffocating financial situation of low developed countries, playing a "complementary" currencies. Lietaer, author of "The Future of Money" (Century, London, 2000), finds "masculine" features such as competition and monopoly in conventional currencies and "feminine" ones such as collaboration and sharing in complementary ones, denominating them as "yang" / "yin" and conceiving Terra (further information at http://www.terratrc.org/TerraSummary.pdf) as a worldwide complementary currencies.

Last September I had the chance to organize a Europe tour for a Japanese delegation and I could learn furthermore on these cases. Here is a report of ongoing projects in several countries in Europe.

1) LIBRA project (Milan, Italy)
http://www.aequilibra.it/

LIBRA has been conceived by a project team at Bocconi University, Milan. This project, although not put into practice up to now, ties up businesses, consumers and non-profits, receiving high evaluations at several symposia and with some experimentations under way.

This system goes as follows: you get 10.000 bonus points after you buy something at W100,000. You can visit the same shop again to change these bonus points for some goods equivalent to W10,000, but what is interesting here is that they will change from "Bonus" to "Donus"(of "Donum" which means "gift" in Latin) gradually, for instance 1 percent per week, allowing you not to spend for goods but to donate to non-profits you want to support and promoting their social activities(See http://www.aequilibra.it/circuit.htm for details). Advantages of this system are as follows:

  • Make a bridge between Yang and Yin economy
  • Allows you to choose which non-profits to support

    2) Banca Etica (Padova, Italy)
    http://www.bancaetica.com/

    Banca Etica was founded in 1999 after years of preparation by a number of non-profits throughout Italy which suffered from the lack of financial institutions willing to concede them money for their social projects. Currently 120 people (including those non-employed such as counselors) work at the head office and seven branch offices, as well as 15 "ambulant bankers" (contracted people who are allows to represent the bank), offering as much as €300 million loans to 1,261 groups as of August 2004.

    On depositing your money you choose one of the followings four fields:

    (i) social co-operation and organized social work
    (ii) environmental associations and organic agriculture
    (iii) development co-operation in third world countries, fair trade
    (iv) cultural educational initiatives

    You can also determine your interest rate below the upper limit by Banca Etica as the lower interest rate you agree with will make projects more feasible. The Banca Etica examines both the profitability and social/environmental effects of each project before giving loans to non-profits, for instance for a Honduran coffee cooperative to promote fair trade, a project to restore a old downtown in Riace, Southern Italy, organic farms and economic aids to Albania. And depositors hold regular meetings where discussions on different activities of the bank are carried out.

    The Banca Etica, as an actor of social economy, keeps in close touch with other financial institutions and research centers in France, Quebec and Brazil, diffusing its principles to the rest of the world.

    3) Chiemgauer (Bavaria, Germany)
    http://www.chiemgauer.info/ (German and partially in English)

    Chiemgauer, one of REGIO projects to be dealt with later, is quite interesting in the sense that high-school female students started it up after they were interested by their professor's talk and has been operational since January 2003 at Prien am Chiemsee, 80 kms to the East of Munich. Its goals are as follows:

    1. Job creation: Students do office works and receive remuneration
    2. Promotion of cultural, educational and/or ecological activities: The system supports financially non-profits which work for such activities
    3. Promotion of sustainability: Organic foods, use of renewable energy
    4. Enhancing the solidarity: Strengthening the relationship between local consumers and businesses
    5. Promotion of regional economy: Chiemgauer helps the purchasing power to stay in the region longer than Euro, favoring regional businesses

    Let's see how the point two works:

  • Consumers: visit a non-profit they want to support, exchange Euro into Chiemgauer and spend them at businesses within the Chiemgauer region. The system enables them to donate to non-profits without forcing them to dispense some money especially
  • Non-profits: purchase 103 Chiemgauers at 궗100 and resell them to consumers at 궗103, keeping 궗3 for their own activities
  • Local businesses: accept Chiemgauers at face value and purchase good/service from other businesses or redeem them into euro, paying 5 percent of commission. Their participation to Chiemgauer attracts consumers which wants to help non-profits and leads to the increase of their sales.

    500 individual members and 200 businesses join this system as of October 2004, with 24,000 Chiemgauers put into circulation. And Christian Gelleri(professor) told them that a Chiemgauer bill realizes on average 2.5 transactions before being reconverted into euro while euro itself makes 1.7 before running out of the region, showing that Chiemgauer is an effective tool to enhance regional trades.

    4) Lecture by Dr. Margrit Kennedy
    http://www.margritkennedy.de/

    Dr. Margrit Kennedy, originally architect, is one of the leading figures in this field as she published "Interest and Inflation-free Money"(the whole text is available in English at: http://userpage.fu-berlin.de/~roehrigw/kennedy/english/) in 1980s after facing with the difficulty that her eco-friendly building designs were rejected because of their lack of cost-effectiveness. She shows three graphics to tell us today's fundamental problems with our monetary system.

    1. Basic Types of Growth Patterns
    (http://userpage.fu-berlin.de/~roehrigw/kennedy/english/fig1.jpg/)

    Here three growth patterns are shown: human beings and other animals follow the curve A (natural curve), in other words people grow quick when they are baby or child but stop growing quantitatively when they become adult, starting qualitative developments. The same is true with the economy which should stay stable after reaching a peak but the current compound interest rate obliges us to follow C, which is observed in the biological world when cancer appears, exhausting in the end the whole body. And that's why our current economic system, by requiring exponential growth, is destined to eat up all natural resources and aggravating our labor conditions for its own sake.

    2. Indirect repayment of interest by those who have no loan at all
    (http://userpage.fu-berlin.de/~roehrigw/kennedy/english/fig3.jpg/)

    People tend to think that loans are repaid only by those who borrow money but in fact everybody pays them indirectly, for instance the 38 percent of the cost for the drinking water in Northern part of (then) West Germany in 1981 and as much as 77 percent of cost for houses on average in West Germany in 1979 was for the repayment of interest.

    3. Transfer of wealth from the poor for the rich
    (http://userpage.fu-berlin.de/~roehrigw/kennedy/english/fig4.jpg/)

    But the most serious problem of our current monetary system is that it redistributes money from the poor to the rich: The graphic above shows that 80 percent of households in (then) West Germany are impoverished by interest while only a small amount of rich families get much richer.

    Currently she's working for the implementation of complementary currencies which are foreign to all these troubles triggered by the current monetary system, among others REGIO (http://www.regionetzwerk.de/, only in German) to be used at a regional level (from 50,000 to 1,000,000 inhabitants) bigger than LETS so that this tool.

    5) SOL project (France)
    No website available yet.

    SOL project, still under preparation, is an electronic currency system conceived as a tool to promote "solidarity economy" with subsidies by the European Committee and provincial governments of France. This project is run by Patrick Viveret, who submitted a report to the French government in which he underscored the importance of human developments and eco-friendly projects rather than GDP and other economic indices and suggesting complementary currencies as a tool for this purpose, and Dominique Picard, an ex-worker for a non-profit whose aim is to educate young actors of solidarity economy. Jacque Chirac sent Patrick Viveret a letter praising his report.

    France is more eager than other countries to promote solidarity economy, i.e. economic activities which also seek to attain social goals such as non-profits, cooperatives and fair trade. SOL, as a tool for these actors, will be implemented experimentally in three regions in France (Nord-Pas-de-Calais, Ile-de-France and Bretagne) in May 2005 in collaboration with MACIF (a mutual credit union), Cheque-Dejeuner (offering economical lunch tickets) as well as provincial governments. And they have already started to examine some possibilities for international collaborations with Poland and Spain.

    Transactions will be done with electronic cards, which makes it quite easier to put "demurrage" into effect and therefore stimulate trades. Details on this project will be presented in Porto Alegre, Brazil during the World Social Forum from Jan 26 to 31, 2005.

    6) WIR Bank (Switzerland)
    http://www.wir.ch/ (in German, French and Italian)

    WIR Bank, to which I couldn't visit as the person in charge was too busy, has been operating a complementary currency called WIR for B2B businesses for 70 years. Member companies offer mortgages to receive loans in WIR which is regarded equivalent to Swiss Franc (CHF) among other member businesses of this cooperative bank. The reason they use WIR instead of CHF is because this allows them to have lower-interest-rate loans since Wir Bank itself can create this very means of exchange. For instance Wir Bank can offer 3 percent of loan in WIR instead of 7 percent in CHF as it doesn't need to borrow money from depositors and/or the central bank.

    Another advantage of using WIR is that transactions among small businesses in the Switzerland are stimulated: the limited acceptance of this unit leads businesses to make deals with other member businesses, increasing their sales in CHF as well. In this way WIR 1.685 billion has been lent and transactions equivalent to CHF 2.380 billion have been done in 2003. And WIR Bank is run still today as a cooperative, which means that its final goal is to help member businesses and not to maximize its profit at the cost of member companies. Lectures on management and IT as well as fairs for member businesses are held by WIR Bank, and members discuss how it should be run at its annual assembly.

    Although WIR Bank is only operational within the Swiss territory, Bartercard Network (http://www.bartercard.com/), another similar system founded in Australia, is on the rise with more than 15 percent of annual growth, with its branch offices in Great Britain, Hong Kong, Thailand, Malaysia, Sri Lanka, Egypt, Russia and other countries. Probably this system will be beneficial to Korean small businesses as well.

    All these experiences are rather new except WIR Bank but they share the goal to give alternatives to neoliberal and unfair socioeconomic system. Approaches may differ from country to country in accordance with its own traditional values but it seems essential to me that all these initiatives all over the world keep in close touch each other to transform our global community towards fairer and more sustainable one.
  • Yasuyuki Hirota's Japanese-language Web site is here.
    ©2004 OhmyNews

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