You may be wondering why Transitioners have the creation of a community currency as one of their top priorities, alongside growing carrots and eco-building. Why should such practical folk consider the effort involved in launching and sustaining a community currency to be worthwhile?
The disasters at Northern Rock exemplify the most important reason: the global financial system is, if you'll excuse me, rocky. Yes I know I'm an economist and so money is my bread-and-butter in a way it isn't for you (and you would not believe how difficult this makes decisions about mortgages and so on) but if you begin to think what life would be like without a functioning monetary system you may come to understand this sense of urgency.
In fact there is no need to imagine it because this situation happened, just a few years ago, in Argentina. The default of the peso led to a monetary vacuum into which commodities such as grain and soya became sucked, to become useable as currency. But the local currency that environmentalists had established a few years before was more flexible and soon became the main medium of exchange. You can find out more about this and its implications for local currencies in this country here: http://www.uea.ac.uk/env/ijccr/contents.html
In numerous other communities from Hungary to New Zealand and from South Africa to the USA local communities have decided to extract their labour and their lives from the global financial system and its inequities. In the case of the Transition Towns the impulse is predominantly about increasing resilience and ensuring that, if climate change brings financial meltdown on the Argentinian pattern, we will have a functioning shadow currency system to turn to. Peter North describes the adventures of these various pioneers in his book Money and Liberation (http://www.upress.umn.edu/Books/N/north_money.html)
There are quite a few questions for community activists seeking to launch their own currency. Should it have decay built into it by imposing demurrage, a sort of reverse interest that means money is gradually worth less over time? The mechanism was invented by German economist Silvio Gesell to increase the velocity of circulation of money, thus increasing economic activity during the 1930s recession in Europe.
But is this idea compatible with the green economist's wish to reduce economic activity? Perhaps the two motivations could be made compatible if the economic activity stimulated in the local economy displaced the more destructive global activity?
Should you deposit money in the bank to back the currency and allow convertibility? This certainly encourages confidence in the currency, but limits creation to the amount of sterling you can spare. Jonathan Dawson, Co-ordinator of the Global Ecovillage Network and a key player at Findhorn, told me that their currency, which is backed in this way, is acceptable at the rate of 100% in their local pub. Now that might get the punters interested.Tweet