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Local Currencies Grow During Economic Recession
Ben Block, 8 Jan 09
Photo courtesy Jason Houston

Five local banks have printed more than 2 million Berkshare notes since 2006.

The 10 Berkshare note features Robyn Van En, a local pioneer of community supported agriculture.
BerkShare_10-front.jpg

The gentle mountain slopes of New England isolate the Berkshires, creating a peaceful remoteness in this southern Massachusetts region.

As a result, independent thinkers have thrived here. Herman Melville penned Moby Dick; Norman Rockwell etched paintings of American life; W. E. B. Dubois authored his first calls for emancipation.

Today, the Berkshires is giving rise to a new wave of free thinking. The region's alternative to the U.S. dollar, Berkshares, is among the most successful of the country's local currencies.

Since the currency's launch two years ago, five local banks have printed more than 2 million paper notes. About 185,000 are currently in circulation, according to Susan Witt, a Berkshare co-founder.

The Berkshires is not alone. More communities are creating their own "complementary" currencies during the current economic crisis in an effort to keep wealth in their region.

Witt is now fielding calls from around the world, she said, especially from the United States and United Kingdom.

"In the last four years, there has been a renewed interest in local economy, local production," said Witt, executive director of the E. F. Schumacher Society, a Massachusetts-based think tank focused on local production. "It just skyrocketed with the collapse of the global economy."

Complementary forms of currency are nothing new, and they frequently appear when mainstream financial systems are in distress. Examples include Greenbacks during the American Civil War, and the British Bradbury "Treasury Notes" and German Kriegsgeld during the First World War.

Alternative currencies, in theory, encourage consumers to make purchases within their communities rather than elsewhere in the country or abroad. "Buying local" circulates wealth in the region, reduces unnecessary imports, and helps avoid higher unemployment levels, supporters say.

At least 4,000 complementary currencies are now estimated to be in circulation worldwide, compared with fewer than 100 in 1990, according to Bernard Lietaer, a co-founder of the Euro and now a local currency proponent.

The currencies take on various forms. Many function similar to the traditional currency but are distributed at a discounted rate to encourage participation, such as the Berkshares or the cimarrón in Venezuela. Others are designed so that each paper note reflects the per hour labor required to create the product, such as Ithaca Hours in New York or Community Oriented Mutual Economy in Hong Kong.

In Switzerland, the WIR (the German word for "we") functions as a mutual credit system. When a buyer makes a purchase from a WIR participant, the seller receives credit in a WIR account. The credit can then be spent by purchasing something from another participant.

Economists have monitored the WIR since it began in 1934. "Whenever the economy goes up, the turnover in WIR decreases.... When business people cannot sell goods in Swiss Francs, then they go onto the WIR," said Margrit Kennedy, a German-based consultant on complementary currencies. "At the present moment, people are much more open to these types of ideas."

Pilot projects similar to the WIR are now under way in Belgium, France, and Germany, Kennedy said.

In order for alternative currencies to succeed, organizations, institutes, or individuals need to be committed to the currencies' additional demands. Not only must the currency be counted separately, but businesses must be convinced to accept the currency and know where they can, in turn, spend it.

In Canada, the Toronto Dollar circulated about $90,000 worth of paper currency last year, less than in years past. Organizers are now attempting to shift to an electronic version to simplify its management. "The labor involved in tracking notes and doing all the accounting involved is too onerous for a volunteer community organization," said David Walsh, the Dollar's co-founder.

Robert Costanza, an ecological economics professor at the University of Vermont, said local currencies support "buy local" programs, but he has not found any currency that has had a significant impact on a region's overall economy. "There are several examples of currencies that survive. They keep going," Costanza said. "But the question is, at what scale?"

Costanza helped launch Burlington Bread, an alternative currency in Burlington, Vermont, 10 years ago. His goal was for the bread "slices" to eventually represent at least 20 percent of the local economy. But the currency fizzled out by 2006 when the city of Burlington and other municipal institutions denied requests to help, saying the currency was too risky.

"It's a critical mass problem," Costanza said. "Until you get to critical mass, it's a boutique thing.... It functions more like a gift certificate."

Witt said the currencies offer more than financial support. In the Berkshires, residents had become so accustomed to online purchases that they were neglecting neighborhood stores.

"You don't just go online and use the Berkshare. You go down to Main Street stores, have a conversation with a shopkeeper, hear what it's like to do business in the community," Witt said. "It's a conversation. It's the building of citizenship. We're out of that habit. But when we re-establish the habits, we like it."

Read more about local and alternative currency in our archives:

Create Your Own Currency
"Complementary" Currency Helps Local Communities
Banking on the Community


Ben Block is a staff writer with the Worldwatch Institute. He can be reached at bblock@worldwatch.org.

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Comments

I'm very fond of time-dollar exchanges where you trade amounts of time. With a time exchange you value everyone's services at the same rate and it allows an equality not seen in our current economic system.


Posted by: gordon on 8 Jan 09

So the government doesn't care if all these exchanges don't get taxed ?


Posted by: Gina on 8 Jan 09

Even in India Dollar has gone very strong. Which i dont understand why is it happening. Good money is going to bad markets in times of economic recession.


Posted by: Jitendra on 21 Jan 09

DIE HSH NORDBANK AM DEUTSCHLAND

von Raivo Pommer

Die HSH Nordbank hat das vergangene Jahr nach vorläufigen Zahlen mit einem Verlust von bis zu 2,8 Milliarden Euro abgeschlossen. Das teilte die Bank am Freitag in Hamburg mit.

Die Abschreibungen für das abgelaufene Jahr bezifferte das Institut auf 1,6 Milliarden Euro. Dazu kommen eine erhöhte Risikovorsorge im Kreditgeschäft von 1,4 Milliarden Euro sowie weitere Einmaleffekte im Gefolge der Finanzmarktkrise von 0,9 Milliarden Euro. Das sind zum Beispiel die Pleite der US-Bank Lehman Brothers und die Zahlungsunfähigkeit Islands. Der Zins- und Provisionsüberschuss, also die Erträge der Bank, betrugen zwei Milliarden Euro.

Mit den Abschreibungen des Jahres 2007 wird die HSH Nordbank durch die Finanzmarktkrise somit insgesamt mit rund 3,8 Milliarden Euro belastet. Die Wirtschaftsprüfungsgesellschaft KPMG sei bei ihrer intensiven Suche nach weiteren Risiken im wesentlichen nicht fündig geworden, hieß es aus informierten Kreisen im Umfeld der Bank. Insgesamt hält die HSH Nordbank noch Wertpapiere über rund 22 Milliarden Euro im sogenannten Kreditersatzgeschäft.

Wegen der hohen Abschreibungen und Verluste hatte die Bank als eines der ersten Institute den staatlichen Rettungsschirm des Bankenfonds SoFFin in Anspruch genommen und eine Liquiditätsgarantie von 30 Milliarden Euro erhalten. Davon sind bislang für die Bank aber nur zehn Milliarden Euro nutzbar, so lange nicht alle Auflagen des SoFFin erfüllt sind. Bis Samstag (21.2.) muss die Bank ein neues Geschäftsmodell und die notwendige Kapitalausstattung vorweisen.

Die Bank schlägt daher ihren Eigentümern eine Reihe von Maßnahmen vor, um die notwendige Kernkapitalquote von sieben Prozent zu erreichen. Ein wesentlicher Baustein ist die Erhöhung des Eigenkapitals um drei Milliarden Euro. Dieser Betrag wäre von den Haupteignern Hamburg (30,4 Prozent) und Schleswig-Holstein (29,1 Prozent) aufzubringen. Auch der US-amerikanische Investor J. Christopher Flowers (25,7 Prozent) habe eine Beteiligung an der Kapitalerhöhung noch nicht abgelehnt. Definitiv nicht mitziehen werden jedoch die schleswig-holsteinischen Sparkassen (14,8 Prozent).

Zusätzlich zu dem erhöhten Eigenkapital will die HSH Nordbank eine Risikoabschirmung von zehn Milliarden Euro von den Eigentümern, was ebenfalls die Kernkapitalquote erhöht. Schließlich steht die Verkleinerung der Bank und die Konzentration auf die Kerngeschäfte in der norddeutschen Region und auf die Spezialgebiete Schiffe, Flugzeuge, Immobilien und erneuerbare Energien bevor. Die Bank hatte bereits angekündigt, ihre Bilanzsumme von mehr als 200 auf rund 120 Milliarden Euro zu reduzieren. Der bisher veröffentlichte Abbau von 750 der 4300 Stellen dürfte vermutlich nicht ausreichen; es werden wohl mehr als 1000 Stellen werden.



Posted by: Euromann on 14 Feb 09

Des Dramas nächster Akt

von Raivo Pommer

Angesichts der Bankenmisere sinnt die Bundesregierung über die Enteignung von Aktionären nach. Was als Theater begann, verselbstständigt sich zu einer Grundsatzdebatte, die völlig überflüssig ist.
Erneut geistert das Gerücht vom Ende der Währungsunion durch Europa. Doch eine Rückkehr von Drachme und Lira würde allen schaden.

Regelmäßig heißt es, der Euro werde scheitern. Doch ein Staatschef, der den Euro ernsthaft loswerden möchte, wurde in Brüssel noch nicht gesichtet.

Die letzten Takte des Geburtstagsständchens sind noch nicht verklungen, da stimmt die Presse schon den Abgesang an: Laut „Welt“ steht die „Eurozone vor einer Zerreißprobe“, weil „die Kapitalmärkte knallhart auf ein Auseinanderbrechen der Währungsunion spekulieren“. Das „Handelsblatt“ beobachtet, wie sich auch „in Irland Panik breitmacht“. Der keltische Tiger sei am Ende, müsse zu viel Geld für die Bankenrettung aufbringen. Derweil behauptet die „Financial Times Deutschland“, dass „die Eurozone auseinanderdriftet“.
Scheinbar durchlebt die zehn Jahre junge Gemeinschaftswährung eine existenzielle Krise. Wie ein Gespenst schleicht die Sorge durch Europas Hauptstädte, einige Länder könnten mit der Finanzkrise in den Bankrott getrieben werden. In Griechenland, Portugal und Spanien ist die Lage mittlerweile so ernst, dass internationale Ratingagenturen ihre Benotung für die Kreditwürdigkeit dieser Staaten herabgesetzt haben. Irland droht dasselbe Schicksal. Unmittelbare Folge: Wollen diese Länder neue Staatsanleihen ausgeben – und wer kommt daran schon vorbei in dieser Krise? –, müssen sie höhere Zinsen zahlen.






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