The Future of Community Currencies
Williams College, Williamstown, Massachusetts
Session title: "The Future of Local Currencies"
comments by Michael Linton
Is there a future for local currencies?
Yes, absolutely there is. However, probably less by that name, and more as "community currencies". The key attribute of this currency is its community nature. The function is to connect a community. Thatís the arrangement that makes these moneys work, whether locally or globally, whether paper or account. Only connect. Thatís all, and thatís community.
Certainly, the local economy is where community money will be most commonly and valuably applied, but thatís a matter of the economy and the ecology, which determine that most communities are local - at least, those that really matter in the long run.
The name will hopefully follow the form rather than the application, and avoid confusion of cause and effect.
Much, and for a long time. Letís look at just one factor of scale. Community currency operations last year in the USA made around $1 billion in fees, although Iíll bet none of the people doing that are at this conference .
Commercial "barter" organizations now report around $10 billion gross trading a year, levying fees (in cash) around 10%. These are community currencies, by function if not by name, and despite their cash commisions. So we can say the use of community currencies by US business already accounts for about 0.1% of the economy.
To put that into perspective, charitable donations by business (in Canada) are also about 0.1% of gdp (total donations, almost all from individuals, are around 1%). So business use of community currency has already reached the same scale as business donations to charity.
Presently there is no functional relation between corporate use of community money and charitable donations. The match in scale is merely an indication that they are seen as having similar importance. However, we ("we" is Landsman Community Services Ltd. and associates, "I" is me) have recently been working on a program - community way - that does link the processes, and will synergistically increase both.
In Canada, giving by individuals is 10 times as high as giving by corporations, and is highly limited by personal capacity. In reality, not very many people give, and most donít really give much. Most who give (and many who donít) would like to give more, but canít afford to. For business, itís the same - they would like to do more but they canít, itís just money out the door and what do they get for it? Image and good public relations, at best.
The community way program starts by business making donations in community currency to local charities and projects. People support their charities by giving them cash for the community currency, and use the currency at the local businesses. Public interest in this form of support, which really costs the person nothing, will be at least equivalent to current levels of giving. Many people who currently give, and many that rarely give, will welcome the option to also use this exchange. They can do more, with less.
This program is, in marketing jargon, a "loyalty" system (although here the loyalty is to the community rather than to an individual business, air line, or shopping mall) that links particular consumers with particular businesses, and business that wants more business will readily underwrite this demand for donations in community money.
For example, a recent article in the Wall Street Journal reported that many US charities are now giving frequent flyer points in exchange for cash donations. The carriers sell the points to the charities for a few cents on the $, simply for the business they bring in.
We calculate that community currencies can eventually double total charitable giving, with particular emphasis on local needs, and establish that as much as 10% of the local economy is accounted in community currency.
For more on this work in progress, review the materials at http://www.u-net.com/gmlets/go and particularly the newmarket file.
However, thatís just one part of the process. Other calculations related to other factors indicate that in time local and regional currencies will account for over 25% of the overall economy - in some places for as much as 50%.
If these figures seem excessive, you might try looking at it from the other end - is there a future for national currencies? Personally, I am sure there is, but their place in the general economic mix will depend on how people evaluate the costs and benefits of using it when there are many other moneys, most of which will be interest free, and much more readily available. Whenever they can, most people, and virtually all business, will use a money that comes back, just to avoid spending the stuff that doesnít. Iím sure I will.
Every business will use several community currencies in addition to conventional money, and almost everyone who presently finds it useful to have a bank account will also have accounts in community currencies. Quite probably, most of us will maintain these accounts through our bank or credit union or credit card.
Most of us will use some form of smart card for shopping, because they will readily carry the national currency, and 4 or more local currencies, they will be anonymous and secure, and processing will be instantaneous and almost cost free. A purchase at a store will typically be 70% in federal, and 30% on the buyerís choice of several local or regional systems, with applicable taxes added in federal.
Most community currency trading - over 90% - will be measured in $ (or the national measure). Some trading will be accounted in time units, and some will be internal transfers within co-operative communities, joint ventures, virtual corporations.
Some systems will use forms of coinage or bills, but only a few and generally for a particular purpose.
It could be through government initiative, but that has to be the least likely scenario.
It could first appear in the mainstream as a means of supporting player trades in the major professional sports leagues, who are presently more accustomed to haggle and trade and barter.
It could be that the operators of commmercial "barter" systems get wise - but they are busy looking as hard as possible in the wrong direction, and their avid interest in their own interest seems to obstruct their vision. Itís more likely that the clients of these "barter" groups will someday wake to the fact that they donít need to pay 10% cash commisions if they use "proper" community currencies. That is likely to happen at about the same time as those who run "proper" community currencies services learn to do it properly.
More realistically, it could be by way of community way.
But quite possibly, a single credit union or bank, almost anywhere in the world, paying attention and willing to try something simple, safe and easy, could do it all. They could offer their clients an additional account, denominated in community currency, and only good for transfers to another account in the same currency. This money could work across several branches, or several banks, using current systems.
The last suggestion above could happen almost anywhere, almost any time and take only a few days to set up - so, almost certainly, sooner than expected.
I welcome any comments on these ideas. Enjoy your conference,
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Version #001 - 8-07-96 - compiled by Michael Linton of Landsman Community Services Ltd.