Bay Area Community Exchange (BACE) is a collaborative network that Bay Area Community Exchange (BACE) is a collaborative network that supports the development of alternative means of exchange in the San supports the development of alternative means of exchange in the San Francisco Bay Area. We provide research and development support, Francisco Bay Area. We provide research and development support, incubation of alternative exchange projects, and education to the Bay incubation of alternative exchange projects, and education to the Bay

Area community about economic issues. Through our work with Area community about economic issues. Through our work with currency projects, we will create an economy that is more sustainable, currency projects, we will create an economy that is more sustainable,

just, and embedded in healthy community connections.just, and embedded in healthy community connections.

What is the Economy?What is the Economy? A way of meeting our needs and wants: production, distribution, A way of meeting our needs and wants: production, distribution,

storage, etc.storage, etc. A measure and reflection of what we value: profit, the Earth, A measure and reflection of what we value: profit, the Earth,

community, happiness, etc.community, happiness, etc. 11stst circle of economy: close to home, friends and family, mostly circle of economy: close to home, friends and family, mostly

gift economy, some informal barter, sharing; direct and indirect gift economy, some informal barter, sharing; direct and indirect reciprocity; based on unconditional love and trustreciprocity; based on unconditional love and trust

22ndnd circle of economy: local community,bioregion, friends, circle of economy: local community,bioregion, friends, acquaintances, small businesses, local government; some trade, acquaintances, small businesses, local government; some trade, local currencies, scrips, timebanks, etc.; some formalized local currencies, scrips, timebanks, etc.; some formalized reciprocity and sharing (like libraries, community gardens); based reciprocity and sharing (like libraries, community gardens); based somewhat on trustsomewhat on trust

33rdrd circle of economy: in the last century has consumed two inner circle of economy: in the last century has consumed two inner circles, $USD and international trading, anonymous and alienated circles, $USD and international trading, anonymous and alienated exchanges, nontransparent, unreal numbers that don’t represent exchanges, nontransparent, unreal numbers that don’t represent real value; only trust in the Fed, Govt, and Wall Street; virtually no real value; only trust in the Fed, Govt, and Wall Street; virtually no popular controlpopular control

The new economy: rebuild the first and second circles through gift The new economy: rebuild the first and second circles through gift economies, sharing and community currencieseconomies, sharing and community currencies

What is money?What is money? A medium of exchange that facilitates trade so there doesn't have to be a A medium of exchange that facilitates trade so there doesn't have to be a

perfect match of what you need and what the person you are trading with perfect match of what you need and what the person you are trading with needs around the same time.needs around the same time.

A piece of paper, plastic card, number in an account, or other placeholder A piece of paper, plastic card, number in an account, or other placeholder with a value that exists only in the perception of those who agree that it with a value that exists only in the perception of those who agree that it has value and trust in it.has value and trust in it.

US dollars are issued by the Federal Reserve, which attempts to set the US dollars are issued by the Federal Reserve, which attempts to set the value of the dollar by controlling the supply of it as an artificially scarce value of the dollar by controlling the supply of it as an artificially scarce resource. This means that even though there may be enough food or resource. This means that even though there may be enough food or housing for everyone, there will not be enough money to pay rent or buy housing for everyone, there will not be enough money to pay rent or buy food. food.

$USD is issued as debt (usually from loan agreements), which means it $USD is issued as debt (usually from loan agreements), which means it must be paid back with interest. That interest comes out of someone must be paid back with interest. That interest comes out of someone else’s pocket. The economy must continually grow to pay off the interest, else’s pocket. The economy must continually grow to pay off the interest, requiring businesses to extract profit from somewhere else (e.g. third requiring businesses to extract profit from somewhere else (e.g. third world labor and natural resources). world labor and natural resources).

Interest funnels wealth to those who already have it and can lend it out, Interest funnels wealth to those who already have it and can lend it out, creating gross inequalities in wealth and social decay and conflict.creating gross inequalities in wealth and social decay and conflict.

Less than 2% of money is actually used for trading goods and services, Less than 2% of money is actually used for trading goods and services, the rest is speculation. the rest is speculation.

The History of MoneyThe History of Money 9,000—6,000 BC: Livestock and agricultural products 4000 BC: Clay tablet receipts 1,200 BC: Cowrie shells 1,000 BC: First metal money and coins 500 BC: Modern coinage from precious metals 118 BC: Leather money (1st banknote) 806 AD: Paper Currency 1535 (discovery date): Wampum string beads 1770s: US issues Continentals to finance American Revolution Pre-Civil War: Over 10k scrips in US, mostly issued by local and state banks 1860’s: US Banking Act establishes national currency, taxes state bank notes

10%, finances Civil War with greenbacks 1890: The Gold standard begins in US 1916: Federal Reserve Act replaces national bank notes with Federal Reserve

notes, declared sole legal tender Great Depression: End of gold standard, over 300 scrips flourish in N. America

until economy picks up again, Swiss WIR Bank is established, time exchanges 1950: Credit card invented 1980’s: Community currencies experience comeback with LETS, Timebanks 2001-2005: Argentina’s economy collapses, Red de Trueque is primary currency

for 1,6 its population

Babylonian warehouse receipt 4000 BC, Babylonian warehouse receipt 4000 BC, Iranian clay currencies 3500 BCIranian clay currencies 3500 BC

Tabu shell money, Papua New GuineaTabu shell money, Papua New Guinea

Yap Island stone moneyYap Island stone money

Federal Reserve NoteFederal Reserve Note

CheckbookCheckbook

Electronic Bank AccountElectronic Bank Account

Credit CardsCredit Cards

What functions does money What functions does money have?have?

Measure of value: A book of US$20 is equal to 5 rides Measure of value: A book of US$20 is equal to 5 rides on BART, standard equivalencyon BART, standard equivalency

Means of exchange: Allows us to get goods and,or Means of exchange: Allows us to get goods and,or services which wouldn't otherwise be acquired with services which wouldn't otherwise be acquired with direct barter, increases fluidity of circulation direct barter, increases fluidity of circulation

Means of saving/storage: Allows us to keep our current Means of saving/storage: Allows us to keep our current asset for future expenditureasset for future expenditure

Means of investment or credit (financial capital, Means of investment or credit (financial capital, speculation): promotes new enterprises, can lend to speculation): promotes new enterprises, can lend to community projects, but with interest and speculation, community projects, but with interest and speculation, also has consequence of concentrating wealth and also has consequence of concentrating wealth and creating economic instabilitycreating economic instability

What is a Community What is a Community Currency?Currency?

means of exchange that has a localized value, usually means of exchange that has a localized value, usually restricted within a geographical region or between people with restricted within a geographical region or between people with specific community connections (like green businesses, specific community connections (like green businesses, artists, schools, farmers or parents)artists, schools, farmers or parents)

represents agreements that acknowledge trust in the represents agreements that acknowledge trust in the community itself, rather the federal government, big banks, or community itself, rather the federal government, big banks, or corporationscorporations

takes many forms: online accounting, tokens, paper bills, takes many forms: online accounting, tokens, paper bills, plastic cards, metal, checkbooksplastic cards, metal, checkbooks

Why Community Currencies?Why Community Currencies? Keeps the wealth created by the exchange of goods and services within the Keeps the wealth created by the exchange of goods and services within the

local community - it cannot be extracted, exported, or benefited by entities local community - it cannot be extracted, exported, or benefited by entities outside of the community. outside of the community.

Multiplier effect: shopping locally keeps 3x more wealth in community, 3x Multiplier effect: shopping locally keeps 3x more wealth in community, 3x more jobsmore jobs

Facilitates abundance rather than scarcity. There is no need for a scarce Facilitates abundance rather than scarcity. There is no need for a scarce means of exchange when we have lots of time and creativity.means of exchange when we have lots of time and creativity.

Recreates a local or bioregional economy that is suited to its ecology and Recreates a local or bioregional economy that is suited to its ecology and community needs. Encourages greater sustainability through import community needs. Encourages greater sustainability through import replacement and sustainable production processes.replacement and sustainable production processes.

Links unmet needs with otherwise unused resourcesLinks unmet needs with otherwise unused resources Stronger and greater numbers of community relationships, which enhances a Stronger and greater numbers of community relationships, which enhances a

different kind of economic security and spiritual connectiondifferent kind of economic security and spiritual connection Community and individual self-determination and sufficiency- local control Community and individual self-determination and sufficiency- local control

over economy and therefore more local self-governance, transparency, over economy and therefore more local self-governance, transparency, participation and feedbackparticipation and feedback

Insulates communities from the roller-coaster market economyInsulates communities from the roller-coaster market economy Different forms of exchange facilitate community resiliencyDifferent forms of exchange facilitate community resiliency Represents real value created by our communities, not market valueRepresents real value created by our communities, not market value Protest against unfair and unsustainable global economyProtest against unfair and unsustainable global economy

Types of CurrenciesTypes of Currencies

LETS (Local Employment Trading Systems): Canada, LETS (Local Employment Trading Systems): Canada, Europe, NZ, South Africa, CES, Fourth Corner Europe, NZ, South Africa, CES, Fourth Corner ExchangeExchange

Business to business credit,exchange: WIR Bank Business to business credit,exchange: WIR Bank (Switzerland), GETS(Switzerland), GETS

Timebanks: Time Banks USA and open source time Timebanks: Time Banks USA and open source time exchanges, Fureai Kippu (Japanese elder care time exchanges, Fureai Kippu (Japanese elder care time exchange)exchange)

Paper currencies: Ithaca Hours, Berkshares, Paper currencies: Ithaca Hours, Berkshares, Cheimgauer, Wara, Red de Trueque, Community Cheimgauer, Wara, Red de Trueque, Community Way, Humboldt Exchange, many moreWay, Humboldt Exchange, many more

Plastic currencies: Banco PalmasCard, Sonoma Go Plastic currencies: Banco PalmasCard, Sonoma Go Local, Bernal BucksLocal, Bernal Bucks

Rewards currencies: Sonoma Go LocalRewards currencies: Sonoma Go Local Business scrips: Comfort Dollars, Deli Dollars, Business scrips: Comfort Dollars, Deli Dollars,

farmers market currenciesfarmers market currencies Hybrids: TlalocHybrids: Tlaloc Reputation currencies: Couchsurfing, Friendly FavorsReputation currencies: Couchsurfing, Friendly Favors

Basis of Issuance and BackingBasis of Issuance and Backing Backed by a person’s commitment to volunteer,spend time either Backed by a person’s commitment to volunteer,spend time either

in the future or hours already earned in the future or hours already earned Backed by a business’ or individual’s promise to allow redemption Backed by a business’ or individual’s promise to allow redemption

for goods or services or a discount for them, including excess for goods or services or a discount for them, including excess business capacity (e.g. unsold goods and services, slow times)business capacity (e.g. unsold goods and services, slow times)

Backed by a community loan which will eventually be repaid Backed by a community loan which will eventually be repaid (especially good for import replacement)(especially good for import replacement)

Backed by a grant to an organization to provide some common Backed by a grant to an organization to provide some common good to the community, value can then converted into the value good to the community, value can then converted into the value provided to the community (e.g. renewable energy kilowatts or provided to the community (e.g. renewable energy kilowatts or veggie shares)veggie shares)

Backed by US dollars in a bank or at a businessBacked by US dollars in a bank or at a business Backed by a commodity- gold, silver, food security, a commodity Backed by a commodity- gold, silver, food security, a commodity

basketbasket Backed by fiat from an issuing authority, similar to Federal Backed by fiat from an issuing authority, similar to Federal

ReserveReserve

Mutual Credit SystemsMutual Credit Systems

Each individual member, organization or business can create Each individual member, organization or business can create their own credit by providing a good or service. The receiver is their own credit by providing a good or service. The receiver is debited their account and the giver is credited to their account debited their account and the giver is credited to their account so the system is always in balance. This creates significant so the system is always in balance. This creates significant abundance of transactions outside what is possible with scarce abundance of transactions outside what is possible with scarce national currency.national currency.

Many kinds of mutual credit systems exist for business to Many kinds of mutual credit systems exist for business to business trading (WIR Bank), trading mostly between individuals business trading (WIR Bank), trading mostly between individuals (Timebanks), and trading between multiple kinds of entities (Timebanks), and trading between multiple kinds of entities (LETS).(LETS).

Name Previous amount

Change Current amount

Andy +10 -25 -15

Betty +5 0 +5

Charly -15 +25 +10

Total 0 0 0

LETS (Local Employment Trading LETS (Local Employment Trading Systems)Systems)

Started in 1982 by Michael Linton in Canada, then Started in 1982 by Michael Linton in Canada, then thousands spread into other countries (UK, Australia, NZ, thousands spread into other countries (UK, Australia, NZ, continental Europe, South Africa etc)continental Europe, South Africa etc)

Mutual credit system where members exchange goods Mutual credit system where members exchange goods and,or services and pay in LETS points usually in rough and,or services and pay in LETS points usually in rough equivalence to dollars equivalence to dollars

Appropriate for transactions between individuals in small Appropriate for transactions between individuals in small communities or conglomerations of multiple districts in communities or conglomerations of multiple districts in urban areasurban areas

Helps create community connections and meaningful, self-Helps create community connections and meaningful, self-determined employment, as well as economic determined employment, as well as economic relocalizationrelocalization

Vary in their ability to provide broad scope of goods and Vary in their ability to provide broad scope of goods and servicesservices

More abundant than dollars as they are mostly limited by More abundant than dollars as they are mostly limited by time and creativitytime and creativity

Mostly online now, but used to be done with paper ledgerMostly online now, but used to be done with paper ledger In low tech areas, ease of use is barrier to participationIn low tech areas, ease of use is barrier to participation Businesses reluctant to participate because of trust in Businesses reluctant to participate because of trust in

value of currency and ease of usevalue of currency and ease of use

Timebanks Timebanks Timebanks USA started by lawyer Edgar Cahn as a means to Timebanks USA started by lawyer Edgar Cahn as a means to

promote social justice, public engagement, full “employment” promote social justice, public engagement, full “employment” and facilitate community buildingand facilitate community building

Over 120 official timebanks and open source time exchangesOver 120 official timebanks and open source time exchanges Pool community resources, members help each other by giving Pool community resources, members help each other by giving

service and receiving online credit which can be used to receive service and receiving online credit which can be used to receive services from anyone on the systemservices from anyone on the system

Unit of account is the hour and everyone’s hour is equal. This Unit of account is the hour and everyone’s hour is equal. This abolishes privilege and prejudice and gives a fair “wage” so that abolishes privilege and prejudice and gives a fair “wage” so that everyone can afford what they need.everyone can afford what they need.

Timebanks are considered tax exempt as they are considered Timebanks are considered tax exempt as they are considered volunteering, as long as there is no contractual agreement and volunteering, as long as there is no contractual agreement and everyone’s hour is equal, so people of all ages, employment everyone’s hour is equal, so people of all ages, employment status, and people on government assistance can use it.status, and people on government assistance can use it.

Goods may be included as long as they are priced by the hours Goods may be included as long as they are priced by the hours worked and not equivalent to market value.worked and not equivalent to market value.

Cooperation with other businesses, government agencies and Cooperation with other businesses, government agencies and nonprofits through the co-production modelnonprofits through the co-production model

Have been limited in their ability to provide goods, but may be Have been limited in their ability to provide goods, but may be addressed by hybrid approach with scrip, cards or phonesaddressed by hybrid approach with scrip, cards or phones

www.timebanks .org and www.opensourcecurrency.orgwww.timebanks .org and www.opensourcecurrency.org

Business to Business Business to Business Credit/BarteringCredit/Bartering

Businesses trade goods and services as credits in national Businesses trade goods and services as credits in national or alternative currency units or bothor alternative currency units or both

Items offered on the system are usually based on “excess Items offered on the system are usually based on “excess business capacity” – the capacity for a business to business capacity” – the capacity for a business to produce, which is often under or unsold (e.g. unsold movie produce, which is often under or unsold (e.g. unsold movie seats).seats).

Businesses may be extended low or no interest credit to Businesses may be extended low or no interest credit to start-up, expand, improve or maintain during difficult start-up, expand, improve or maintain during difficult times based on reputation, capacity, past performance, times based on reputation, capacity, past performance, collateral or other assurances.collateral or other assurances.

Credit lines may extend based on successful payback. Credit lines may extend based on successful payback. If the sum of credits is zero or negative, there is usually no If the sum of credits is zero or negative, there is usually no

tax.tax. Businesses may sell credits to customers and vice-versa Businesses may sell credits to customers and vice-versa

as well.as well. Examples: WIR Bank of Switzerland, GETS PlusExamples: WIR Bank of Switzerland, GETS Plus

WIR Bank, SwitzerlandWIR Bank, Switzerland A B2B mutual credit system since 1934 in SwitzerlandA B2B mutual credit system since 1934 in Switzerland Small and medium sized businesses receive loans in WIR Small and medium sized businesses receive loans in WIR

instead of CHFinstead of CHF Interest rates for loans in WIR are lower than those in CHFInterest rates for loans in WIR are lower than those in CHF WIR is only accepted by Swiss SMEs , retaining the WIR is only accepted by Swiss SMEs , retaining the

purchasing power within their own business circle (not out purchasing power within their own business circle (not out into multinationals or into neighboring countries)into multinationals or into neighboring countries)

WIR Bank is a cooperative: member companies control WIR Bank is a cooperative: member companies control WIR Bank through democratic decision-making processesWIR Bank through democratic decision-making processes

Over 1.65 billion CHF traded in 2004, over 70k member Over 1.65 billion CHF traded in 2004, over 70k member businessesbusinesses

Tens of thousands of businesses kept alive through Tens of thousands of businesses kept alive through recessionsrecessions

Backed by collateral (usually members’ property)Backed by collateral (usually members’ property)

Scrips (Paper Currencies)Scrips (Paper Currencies) Cash-like currency backed by a commodity, debt, national Cash-like currency backed by a commodity, debt, national

currency or trust in community and issuing agencycurrency or trust in community and issuing agency 100’s in US during Depression, 1000’s before Civil War100’s in US during Depression, 1000’s before Civil War Convenient for certain types of businesses, small transactions by Convenient for certain types of businesses, small transactions by

independent producers, and low tech environmentsindependent producers, and low tech environments Expensive to produce durable, noncounterfeitable scripExpensive to produce durable, noncounterfeitable scrip Costs time to make sure issuance is not over or under what is Costs time to make sure issuance is not over or under what is

needed for maintaining value, as well as facilitating circulation in needed for maintaining value, as well as facilitating circulation in the communitythe community

Often now combined with plastic cards for ease of use, low Often now combined with plastic cards for ease of use, low overhead, and better tracking of circulationoverhead, and better tracking of circulation

Counterfeiting is usually not a problem on small scaleCounterfeiting is usually not a problem on small scale Can provide anonymity that may be desired by certain Can provide anonymity that may be desired by certain

populations (immigrants, the unbanked, tax resisters) populations (immigrants, the unbanked, tax resisters) Not real alternative currency unless there are other ways to earn Not real alternative currency unless there are other ways to earn

in addition to exchange with national currencyin addition to exchange with national currency Examples: Chiemgauer, Berkshares, Ithaca Hours, Banco Palmas, Examples: Chiemgauer, Berkshares, Ithaca Hours, Banco Palmas,

Red de Trueque, Wara, Community WayRed de Trueque, Wara, Community Way

Red de Trueque, Red de Trueque, ArgentinaArgentina

Red de Trueque, Red de Trueque, ArgentinaArgentina

The largest complementary currency system in the worldThe largest complementary currency system in the world A barter club in the suburb of Buenos Aires in May 1995 A barter club in the suburb of Buenos Aires in May 1995

with 23 members grew into a huge national network of with 23 members grew into a huge national network of thousands of clubs when the 2001 economic crash hitthousands of clubs when the 2001 economic crash hit

6 million people (1 out of 6 Argentineans at that period) 6 million people (1 out of 6 Argentineans at that period) made ends meet during the economic crisis starting in made ends meet during the economic crisis starting in 20012001

The mismanagement, corruption and counterfeiting of the The mismanagement, corruption and counterfeiting of the currency led to a severe inflation and most people left currency led to a severe inflation and most people left it40,000 to 50,000 still go on exchangingit40,000 to 50,000 still go on exchanging

Some initiatives to revive this movementSome initiatives to revive this movement

Banco Palmas, BrazilBanco Palmas, Brazil

Banco Palmas, BrazilBanco Palmas, Brazil A community bank started by STRO Foundation and Joaquim A community bank started by STRO Foundation and Joaquim

Melo in Fortaleza, Ceará, Brazil since 1998 issuing credit cards, Melo in Fortaleza, Ceará, Brazil since 1998 issuing credit cards, home loans, consumer loans, grants and paper currency as home loans, consumer loans, grants and paper currency as microcredit, through purchase or directly earned through workmicrocredit, through purchase or directly earned through work

Banks are opened with an initial donation in Reales with an Banks are opened with an initial donation in Reales with an equivalent amount created in Palmasequivalent amount created in Palmas

For a fee of 1%, amounts in local currency can be swapped with For a fee of 1%, amounts in local currency can be swapped with the national currency (ratio 2:1)the national currency (ratio 2:1)

The bank offers credits in the local currency (interest-free) and in The bank offers credits in the local currency (interest-free) and in Brazil's national currency (interest rate 2%) Brazil's national currency (interest rate 2%)

Interest rates on microcredits are much lower than Reales Interest rates on microcredits are much lower than Reales (Brazil’s currency), enabling people with limited income to start (Brazil’s currency), enabling people with limited income to start up their own businessup their own business

Scrip and plastic card issued in equivalence to Brazilian RealScrip and plastic card issued in equivalence to Brazilian Real Managed by neighborhood association, community membersManaged by neighborhood association, community members Has created 1200 jobs and many public works projectsHas created 1200 jobs and many public works projects Some people live entirely off Palmas rather than RealesSome people live entirely off Palmas rather than Reales Over 50 similar initiatives in Brazil and a few in other countriesOver 50 similar initiatives in Brazil and a few in other countries Supported by the Central Bank of BrazilSupported by the Central Bank of Brazil Along with Red de Trueque, most successful in helping poorAlong with Red de Trueque, most successful in helping poor

Chiemgauer, GermanyChiemgauer, Germany

Chiemgauer, GermanyChiemgauer, Germany Network of 30 REGIO (regional currencies) projects throughout Germany Network of 30 REGIO (regional currencies) projects throughout Germany

started by high-school students with their professor in Jan 2003started by high-school students with their professor in Jan 2003 1300 individual and 600 business members1300 individual and 600 business members, 5 district offices and 50 issuers , 5 district offices and 50 issuers Goal is to improve local purchasing power and bind currency to local Goal is to improve local purchasing power and bind currency to local

district, thereby increasing flow and reducing leakage of wealth, and district, thereby increasing flow and reducing leakage of wealth, and reduce emissions from transportreduce emissions from transport

€€-backed paper and card keeps wealth within the region that already has -backed paper and card keeps wealth within the region that already has strong local economy and can create good circulation loopsstrong local economy and can create good circulation loops

~C560,000 (=€560,000) in circulation, increasing local businesses’ ~C560,000 (=€560,000) in circulation, increasing local businesses’ turnover (about 4 million Chiemgauer/year), C100,000 bought/month, turnover (about 4 million Chiemgauer/year), C100,000 bought/month, 70% spent again and not immediately redeemed for 70% spent again and not immediately redeemed for =€=€

Chiemgauer office sells C100 at 97 euro to other non-profits.Local non-profits sell Chiemgauer office sells C100 at 97 euro to other non-profits.Local non-profits sell C100 at 100 euro to their members, earning 3 euro to be spent for own activitiesC100 at 100 euro to their members, earning 3 euro to be spent for own activities

Local businesses spend C100 to other local businesses or redeem 95 Euro, and 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 the difference of 2 euro will be spent to cover the administrative cost of Chiemgauer office, 3% to nonprofitsChiemgauer office, 3% to nonprofits

Demurrage (negative interest) incorporated- 2%,quarter, 8%,year, stamp purchase Demurrage (negative interest) incorporated- 2%,quarter, 8%,year, stamp purchase to validateto validate

Kits for provided for business accountingKits for provided for business accounting Facilitates import replacement- local apple growing increasing to fulfill supply chainFacilitates import replacement- local apple growing increasing to fulfill supply chain Limited by ability to purchase Chiemgauers with EurosLimited by ability to purchase Chiemgauers with Euros

WaraWara, Austria, Austria

WaraWara, Austria, Austria Issued by the mayor of Woergl in July 1932, during the Issued by the mayor of Woergl in July 1932, during the

Great DepressionGreat Depression Utilized demurrage fee or negative interestUtilized demurrage fee or negative interest Quick circulation reactivated local trades and people even Quick circulation reactivated local trades and people even

tried to pay their tax in advancetried to pay their tax in advance Reduced unemployment by 30% in one yearReduced unemployment by 30% in one year Helped produce all kinds of needed public works projectsHelped produce all kinds of needed public works projects So successful economically that the Austrian Central Bank, So successful economically that the Austrian Central Bank,

fearing to lose its grip over its national currency, stopped fearing to lose its grip over its national currency, stopped it in Sep 1933it in Sep 1933

Similar cases occurred in the past (up to 1950s) in Similar cases occurred in the past (up to 1950s) in Germany and France, stopped by the central governmentsGermany and France, stopped by the central governments

Berkshares, Berkshares, MassachusettsMassachusetts

Berkshares, Berkshares, MassachusettsMassachusetts

  

Started in 2006 in Berkshire region by EF Schumacher SocietyStarted in 2006 in Berkshire region by EF Schumacher Society The exchange rate is ninety-five cents per BerkShare.  Ninety-The exchange rate is ninety-five cents per BerkShare.  Ninety-

five federal dollars will yield one hundred BerkSharesfive federal dollars will yield one hundred BerkShares Federal dollars remain on deposit at the BerkShare Exchange Federal dollars remain on deposit at the BerkShare Exchange

Banks to redeem excess BerkShares at a five percent discount.Banks to redeem excess BerkShares at a five percent discount. 100 BerkShares would be exchanged for ninety–five $USD100 BerkShares would be exchanged for ninety–five $USD Nonprofits can purchase Berkshares at 5% discount and sell to Nonprofits can purchase Berkshares at 5% discount and sell to

membership,donors at 100%membership,donors at 100% Go into circulation through purchasing at bank or business.Go into circulation through purchasing at bank or business. Approximately 400 businesses and 5 banks (15 branches) Approximately 400 businesses and 5 banks (15 branches)

involved.involved. Currently over 2 million Berkshares in circulationCurrently over 2 million Berkshares in circulation Eventually plan to delink from US dollar and expand to rest of Eventually plan to delink from US dollar and expand to rest of

regionregion Good for easy to adopt, business friendly, transitional strategyGood for easy to adopt, business friendly, transitional strategy Challenge to get businesses to spend Berkshares on supplies Challenge to get businesses to spend Berkshares on supplies

rather than converting back to $USDrather than converting back to $USD

Ithaca Hours, NYIthaca Hours, NY

Ithaca Hours, NYIthaca Hours, NY Started in 1991 in by Paul GloverStarted in 1991 in by Paul Glover Over 900 businesses, thousands of individuals accept HOURSOver 900 businesses, thousands of individuals accept HOURS Over $120k worth of hours issued, estimated trade facilitation in Over $120k worth of hours issued, estimated trade facilitation in

the millions.the millions. Issued by fiat of Ithaca Hours Circulating CommitteeIssued by fiat of Ithaca Hours Circulating Committee Unit of account is HOUR, equivalent to living wage of $10, all Unit of account is HOUR, equivalent to living wage of $10, all

hours are not necessarily equalhours are not necessarily equal New HOUR notes are issued as disbursements to those who pay New HOUR notes are issued as disbursements to those who pay

for a listing in the directory or renew membership, loans to for a listing in the directory or renew membership, loans to participants,small business at no interest, as small grants to participants,small business at no interest, as small grants to community organizations and a limited number issued to help community organizations and a limited number issued to help cover basic system expensescover basic system expenses

Some local business employees paid partially in hoursSome local business employees paid partially in hours Local public transit authority accepts hours for bus fareLocal public transit authority accepts hours for bus fare Individuals like the idea of calculating a fair wage in hoursIndividuals like the idea of calculating a fair wage in hours Businesses especially have difficulty accounting in hours, even Businesses especially have difficulty accounting in hours, even

though tied to $10 living wagethough tied to $10 living wage

Community WayCommunity Way

Community WayCommunity Way Businesses donate community way dollars (cw$), not cash or Businesses donate community way dollars (cw$), not cash or

products, to schools, organizations, and projects of their products, to schools, organizations, and projects of their choice, undertaking to accept community way dollars (cw$) in choice, undertaking to accept community way dollars (cw$) in part payment (usually between 15% and 50%) of a sale.part payment (usually between 15% and 50%) of a sale.

Organizations spend the cw$ at participating businesses, Organizations spend the cw$ at participating businesses, increase staff wages and pay for unpaid overtime, reward increase staff wages and pay for unpaid overtime, reward volunteers, and hire local contractorsvolunteers, and hire local contractors

People fund the nonprofits and projects they want to support by People fund the nonprofits and projects they want to support by exchanging normal money for cw$, which they then spend in exchanging normal money for cw$, which they then spend in any of the participating shops, restaurants, etc.any of the participating shops, restaurants, etc.

Businesses then spend the earned (redeemed) cw$ with other Businesses then spend the earned (redeemed) cw$ with other participating businesses, pay staff bonuses, hire local participating businesses, pay staff bonuses, hire local contractors, and so on. They get tax credits on donations, and contractors, and so on. They get tax credits on donations, and they collect taxes on the whole amount of the sale, just like they collect taxes on the whole amount of the sale, just like normal money.normal money.

Simple and cash free way to increase sales, strengthen the Simple and cash free way to increase sales, strengthen the local economy, and secure customer recognition and loyalty. local economy, and secure customer recognition and loyalty. Since the cw$ are as good as cash at participating businesses, Since the cw$ are as good as cash at participating businesses, people can help without losing purchasing power, and by people can help without losing purchasing power, and by shopping locally, they vote for the community they want.shopping locally, they vote for the community they want.

Community Project/Specific Community Project/Specific Use CurrenciesUse Currencies

Community Project/Specific Community Project/Specific Use CurrenciesUse Currencies

Can be used to create sustainable enterprises and community Can be used to create sustainable enterprises and community projects like urban food production and renewable energy projects projects like urban food production and renewable energy projects or to reward positive activities like ridesharingor to reward positive activities like ridesharing

Money and time invested in project is rewarded with community Money and time invested in project is rewarded with community currency (e.g. veggie shares, kilowatt hours), which can then be currency (e.g. veggie shares, kilowatt hours), which can then be redeemed for food or energy in the future or at partnering redeemed for food or energy in the future or at partnering enterprises already establishedenterprises already established

Hybrid of CSA model and Deli DollarsHybrid of CSA model and Deli Dollars Advantage of specific cherished cause to attach to as motivatorAdvantage of specific cherished cause to attach to as motivator Challenge to use unless expanded to other goods and services as Challenge to use unless expanded to other goods and services as

a general use currencya general use currency Examples: Bay Area, CA and Montpelier, VT food currency Examples: Bay Area, CA and Montpelier, VT food currency

projects in design process, recycling/composting tokens in projects in design process, recycling/composting tokens in Curitiba, BrazilCuritiba, Brazil

Business ScripsBusiness Scrips

Deli Dollars, 1989Deli Dollars, 1989

Business ScripsBusiness Scrips Businesses need money for financing start-up or expansion Businesses need money for financing start-up or expansion

or temporary survival loan. or temporary survival loan. Useful when business can’t qualify for bank loan or doesn’t Useful when business can’t qualify for bank loan or doesn’t

want to pay interest.want to pay interest. Business issues its own scrip in exchange for $USD, usually Business issues its own scrip in exchange for $USD, usually

in set total amount and with expiration and,or beginning in set total amount and with expiration and,or beginning date.date.

Customers redeem goods or services from business in the Customers redeem goods or services from business in the future usually for a discount or reward using company scrip future usually for a discount or reward using company scrip or currency.or currency.

Can be used to pay employees, volunteers, or suppliers.Can be used to pay employees, volunteers, or suppliers. Would be useful for expanding individual businesses or Would be useful for expanding individual businesses or

networks of businesses with social, environmental mission networks of businesses with social, environmental mission and worker cooperatives.and worker cooperatives.

Very easy to implement.Very easy to implement. Good publicity for business.Good publicity for business. Can be start of general use local currency.Can be start of general use local currency. Need to be careful of securities laws.Need to be careful of securities laws. Examples: Deli Dollars, Comfort Dollars, ~Detroit CheersExamples: Deli Dollars, Comfort Dollars, ~Detroit Cheers

Rewards/Loyalty CurrenciesRewards/Loyalty Currencies Provide rewards to members to shop at participating Provide rewards to members to shop at participating

businesses. businesses. Rewards may be points redeemable for discount or Rewards may be points redeemable for discount or

additional goods/services.additional goods/services. These points may become a true community currency at These points may become a true community currency at

some point.some point. Rewards can be transferred to nonprofits.Rewards can be transferred to nonprofits. Easy for businesses to adopt. May get complicated for Easy for businesses to adopt. May get complicated for

consumers to use.consumers to use. Forms- cards, vouchers, online accounts, money tagsForms- cards, vouchers, online accounts, money tags Examples- frequent flyer miles, Sonoma Go Local, Bernal Examples- frequent flyer miles, Sonoma Go Local, Bernal

BucksBucks

Legal ConsiderationsLegal Considerations Complementary currencies are legal within certain parametersComplementary currencies are legal within certain parameters Must not be easily confused with $USDMust not be easily confused with $USD Must be able to calculate a conversion to $USD for tax purposes if Must be able to calculate a conversion to $USD for tax purposes if

taxabletaxable Standard employment and sales tax laws may apply, as they apply to Standard employment and sales tax laws may apply, as they apply to

cash and electronic account transactionscash and electronic account transactions Systems may be required to provide tax reports to users and to IRS Systems may be required to provide tax reports to users and to IRS

(esp. business to business systems)(esp. business to business systems) Time banks received tax exemption status- considered nontaxable Time banks received tax exemption status- considered nontaxable

volunteering systemvolunteering system No denomination at a fraction of $USD (e.g. 25 cents)No denomination at a fraction of $USD (e.g. 25 cents) Metal coins are legal grey areaMetal coins are legal grey area If they become too big, the federal government may tighten laws to If they become too big, the federal government may tighten laws to

restrict their userestrict their use Securities laws may apply to some business scripsSecurities laws may apply to some business scrips Employees can not be forced to accept alternative currencyEmployees can not be forced to accept alternative currency See “Rethinking Our Centralized Monetary System”, as well as See “Rethinking Our Centralized Monetary System”, as well as

Katovich Law in Oakland (Jenny Kassan) and Janelle Orsi in BerkeleyKatovich Law in Oakland (Jenny Kassan) and Janelle Orsi in Berkeley

Questions in Designing a Questions in Designing a CurrencyCurrency What are your complementary currency’s goals?What are your complementary currency’s goals?

What are unmet needs in your community, region?What are unmet needs in your community, region? What unused resources are available?What unused resources are available? Who will be the most interested in complementary currencies? Who will be the most interested in complementary currencies? Who would it serve?Who would it serve? Who will be the members of the start-up project team?Who will be the members of the start-up project team? Will it be managed by a coalition of different sectors or just one Will it be managed by a coalition of different sectors or just one

sector? Businesses, local governments, nonprofits?sector? Businesses, local governments, nonprofits? What means will you use? Commodities, bills, coins, checks, electronic What means will you use? Commodities, bills, coins, checks, electronic

accounts, cell phones, hybridaccounts, cell phones, hybrid What is the unit of your currency? $USD equivalent, goods (e.g. pound of What is the unit of your currency? $USD equivalent, goods (e.g. pound of

corn, kilowatt), hourscorn, kilowatt), hours How will the complementary currency be issued? How will the complementary currency be issued? In exchange for $USD, In exchange for $USD,

giveaway to all membersgiveaway to all members, exchange for goods, fiat issuing authority, time , exchange for goods, fiat issuing authority, time workedworked

How will the project be funded? Subsidy How will the project be funded? Subsidy (grant, donation), membership (grant, donation), membership fee, transaction fee, fee, transaction fee, interest on loan, demurrage, conversion fee, pool of interest on loan, demurrage, conversion fee, pool of business donations, crowdfundingbusiness donations, crowdfunding

Currency Design Currency Design (edited by Luna from Community Currency Guide by Lietaer and Hallsmith)(edited by Luna from Community Currency Guide by Lietaer and Hallsmith)

Set Currency Objectives: Do an assessment of your community where you identify the priorities for matching unmet needs with underutilized resources – this will determine the objective of the complementary currency project you want to implement.

Choose the Appropriate Currency: Review the different types of complementary currencies that are available, and choose the type or types that suit your needs best. Info available at www.sfbace.org

Develop Leadership and Good Governance: Build support for the community currency system, which means finding a group of skilled, responsible people who can help with the different aspects of the project and representation from different sectors of participants.

Choose the Right Mechanisms: Establish a system for managing transactions in your community, which includes considerations of the support medium, standard of value, store of value, issuing procedures, and cost recovery. This system can take many forms, depending on the local resources available, the scale of the project, the type of participants, and the type of currency you select.

Establish a Circulation System: Carefully design the exchange process and circulation system so that the money keeps moving throughout the community and doesn’t stagnate or pool discourage participants. Draw a circulation map, fill in the gaps. Demurrage (negative interest) speed circulation.

Design a sustainable funding mechanism: Through transaction fees, membership or other means in national or local currency.

Currency Design FeaturesCurrency Design Features: :

Standard of ValueStandard of ValueUnit of Account COMMENTS

Tied to the national currency

Familiar reference point but tied to inflation/deflation, if backed by national currency then still scarce

An hour of time Can be used as fixed or flexible standard ,difficult for businesses to use, low confidence in backing, good for

services, difficult for goods

A kilowatt hour of energy

Useful for currencies designed to maximize energy saving and use of renewables

A mile of travel E.g. Air Miles or could be used for car sharing

A pound, kilo of food

E.g. for actual backing with food security or for value reference

A square meter per year

E.g. basis for Community Land Trust

(graphs edited by Luna from John Rogers’ Community Currency Design Manual)(graphs edited by Luna from John Rogers’ Community Currency Design Manual)

Currency Design Features: Currency Design Features: IssuanceIssuance

FEATURECHOICES

FEATURESUB-CHOICES

COMMENTS

Mutual credit(issued by users)

Amount of currency issued by service receivers always exactly matched to service given, can lead to stagnation, poor ease of use, confidence low

unless strong rules and/or collateral backing, good for commercial bartering and offering low/no interest credit, potentially create great abundance

because credit is limited by capacity to produce rather than scarcely issued currency

Fiat (issued by authority)

Commodity backed (food, energy, etc)

Creates confidence, limits abuse, issuance potential, inflation and economic rollercoaster, may still be scarce

Borrowing with legal collateral

May be appropriate to large scale commercial CC only, increases trust in system and significant business participation

Borrowing without collateral

CC loans issued when credit worthiness or trust established

Purchased and redeemable scrip

CC purchased with national currency, circulating as CC, then redeemable for national currency, high level of trust because of national currency

backing, limited usefulness if immediately converted back, good business participation

Commercial scrip Non-redeemable for cash, redeemable for goods or services, may be given as incentives or purchased at discount

Loyalty points Issued for loyalty to business, organization or community, easy to get businesses to participate, can be convertible to community currency, good

for buy local campaigns

Currency Design Features: Currency Design Features: Medium of ExchangeMedium of Exchange

FEATURECHOICES

COMMENTS

Scrip Useful to raise profile of CC, establish visible presence/propaganda/advertising, strengthen local identity, requires security features, costly to print, anonymous

Coins High level of confidence, acceptance for precious metals, establish visible presence and strengthen local identity, significant legal issues

Checks Helps keep track of spending and earning but requires administration, security issues, verification of account balance/payment enforcement

Vouchers Useful for promotions, discounts but not for circulating CC

Swipe cards Useful for automation and integration into business administration but requires investment in technical infrastructure, limit payment acceptance to established

business, transaction fees 1-3%, anonymity may be an issue, allows easy tracking of circulation and analysis to improve system

SMS messages Useful where other media are difficult to organize but requires access to cheap mobile phone network, many poor people now have cell phones, enables small producers to

accept payment anywhere, high cost per transaction on most networks, not well developed systems

Computer/Internet accounting

Useful for automation, centralized record keeping and decentralized self-administration (eg through website), less accessible to low income, elderly, etc., limited by access to

internet (many businesses do not have internet on site)

Addressing ChallengesAddressing Challenges Business participation- simple unit of account (e.g. linked to $USD), easy Business participation- simple unit of account (e.g. linked to $USD), easy

to use medium (cards), provide access to credit (mutual credit clearing), to use medium (cards), provide access to credit (mutual credit clearing), accounting kits, reserve of $USD currency backing in bank, limit % or accounting kits, reserve of $USD currency backing in bank, limit % or timing of acceptance for payment, facilitate integration of supply chain, timing of acceptance for payment, facilitate integration of supply chain, use for wages/bonuses, business participation in design and planninguse for wages/bonuses, business participation in design and planning

Community buy in- address community needs and goals; multi-Community buy in- address community needs and goals; multi-stakeholder participation in design, planning and governance; link to stakeholder participation in design, planning and governance; link to reputable nonprofit, local business or local government; build up large reputable nonprofit, local business or local government; build up large directory before launch; transparency; sound design (e.g. few give-directory before launch; transparency; sound design (e.g. few give-aways, no counterfeiting)aways, no counterfeiting)

Inflation- self-balanced system (e.g. mutual credit), demurrage, tight Inflation- self-balanced system (e.g. mutual credit), demurrage, tight management of issuance and flow, more constant unit (hour, commodity management of issuance and flow, more constant unit (hour, commodity basket, etc.), not $USDbasket, etc.), not $USD

Circulation- facilitate exchange connections and import replacementCirculation- facilitate exchange connections and import replacement Consciousness- public education about monetary system and functions Consciousness- public education about monetary system and functions

and benefits of currenciesand benefits of currencies Cost of administration- grants, member or transaction fees, pay in Cost of administration- grants, member or transaction fees, pay in

community currency, minimize administration, electronic formscommunity currency, minimize administration, electronic forms Ideological conflict- apolitical transformative, transitional approach, or Ideological conflict- apolitical transformative, transitional approach, or

create within like-minded community and demonstrate successcreate within like-minded community and demonstrate success

Key Points to RememberKey Points to Remember Try to involve key people/organizations/network from the Try to involve key people/organizations/network from the

community and from potential participant base early on to build community and from potential participant base early on to build confidence, enthusiasm and better designconfidence, enthusiasm and better design

Currency must have value- purchasing power, Currency must have value- purchasing power, advertising/promotional value, ideological value, community-advertising/promotional value, ideological value, community-building, etc. building, etc.

Must be relatively easy to use as compared to conventional formsMust be relatively easy to use as compared to conventional forms Identify and reduce barriers to participation as much as possibleIdentify and reduce barriers to participation as much as possible Meet unmet needs with underutilized resourcesMeet unmet needs with underutilized resources Facilitate circulation loops- help people find places to spend currency Facilitate circulation loops- help people find places to spend currency

and fill in gaps and fill in gaps  Different currencies systems and features address different goals Different currencies systems and features address different goals

and contexts betterand contexts better You may eventually need a few different currencies to facilitate You may eventually need a few different currencies to facilitate

different exchanges, but start with one that addresses top goalsdifferent exchanges, but start with one that addresses top goals Transparency, good communication and participation are keyTransparency, good communication and participation are key Purely volunteer run currencies rarely succeed- create partnerships Purely volunteer run currencies rarely succeed- create partnerships

with funded organizations, build in sustainability, reciprocity for with funded organizations, build in sustainability, reciprocity for work and resource contributionswork and resource contributions

Further InfoFurther Info ““The Future of Money” (Bernard Lietaer)The Future of Money” (Bernard Lietaer) ““Local Money: how to make it happen in your community” and Local Money: how to make it happen in your community” and

“Money and Liberation: the Micropolitics of Alternative Currency “Money and Liberation: the Micropolitics of Alternative Currency Movements” by Peter NorthMovements” by Peter North

““Money: Understanding and Creating Alternatives to Legal Tender” Money: Understanding and Creating Alternatives to Legal Tender” and “The End of Money and the Future of Civilization” (Thomas and “The End of Money and the Future of Civilization” (Thomas Greco)Greco)

““Interest and Inflation-free Money” (Margrit Kennedy)Interest and Inflation-free Money” (Margrit Kennedy) ““Life Inc.” (Douglas Rushkoff)Life Inc.” (Douglas Rushkoff) ““No More Throw-Away People: The Co-Production Imperative” No More Throw-Away People: The Co-Production Imperative”

(Edgar Cahn)(Edgar Cahn) ““Rethinking Our Centralized Monetary System: the Case for a Rethinking Our Centralized Monetary System: the Case for a

System of Local Currencies” (Lewis D. Solomon)System of Local Currencies” (Lewis D. Solomon) ““Web of Debt” (Ellen Brown)Web of Debt” (Ellen Brown) Films: “The Money Fix”, “Money as Debt” and “The Double Face of Films: “The Money Fix”, “Money as Debt” and “The Double Face of

Money”Money” http://www.sfbace.org in the Education section in the Education section

Contact us:Contact us:

Mira Luna Mira Luna mira@sfbace.org

Chris Lindstrom Chris Lindstrom chris@sociallabs.org

Deneene Brockington Deneene Brockington deneene@rhd.org

Miguel Hirota Miguel Hirota mig@olccjp.net

John Rogers John Rogers john.rogers@valueforpeople.co.ukHeloisa Primavera Heloisa Primavera heloisa.primavera@gmail.com