Commerce Based Currency

Bank of England’s governor Mervyn King: “Is it possible that advances in technology will mean that the world may come to resemble a pure exchange economy? Electronic transactions in real time hold out that possibility. There is no reason, in principle, why final settlements could not be carried out by the private sector without the need for clearing through the central bank. There is no conceptual obstacle to the idea that two individuals engaged in a transaction could settle by a transfer of wealth from one electronic account to another in real time. The same system could match demands and supplies of financial assets, determine prices and make settlements. Financial assets and real goods and services would be priced in terms of a unit of account. A final settlement could be made without any recourse to the central bank. Without such a role in settlements, central banks, in their present form, would no longer exist; nor would money.”


To truly empower a complementary form of tender, it should be issued only on the basis of goods and services have or will change hands, i.e., it should “monetize commerce and exchange value represented by the circulation of currency into the economy". In this way, community members “monetize” the value of their own gross domestic production―goods and services, just as banks monetize the value of collateral assets when they make a loan, except in this case, it is done by the community members themselves based on their own values and criteria, without the “help” or involvement of any government, bank, or ordinary financial institution, and without the need to have any legal tender currency―dollar units from the beginning.

This is what is meant when we refer to liberating the exchange process and restoring―some part of―to the individual and bring it under local control. In this way, the community gains a measure of independence from the supply of legal tender currency―dollars units and the policies and decisions of the central bank―the FED and its member banks. That is the primary mission that needs to be accomplished if we are to transform the destructive effects of the global monetary and banking regime, devolve power to the local level, and build sustainable and human―e economic democracy.

With regard to the second meaning—the “dollar” as a measure of value, we need to understand that a standard becomes established by common usage. We in the United States are accustomed to valuing things in dollar units. We know from our everyday shopping experiences what the value of the dollar unit is in terms of the things we buy and in terms of our own earning power. Any new “language of value” will have to be translated into the dollar “language” that we already understand. How we measure value is a separate question from that of how we create our own payment media. In the process of monetizing local domestic production as described above, we can choose to give our complementary currency any name we wish i.e. "ZIRO book entry tender", but it makes sense initially to define the value of that complementary currency as being equivalent to that of the national dollar unit or use the market value of products or services to determine currency value. In the monetization and exchange process, the following benefits and effects will be experienced by the local economy:

1. Increased volume of currency in a local area

Given that the volume of conventional currency in a local area is scarce by creative design, evidenced by the level of underutilized human and material resources in a given area, complimentary currencies increase the volume of currency in a local area to mobilize these resources. By tying a complementary currency to the national currency when making a purchase, it can be assumed ―and in some cases measured―that the velocity of money in circulation is increased.

2. Increased liquidity in a local area

Complementary currencies are designed to circulate within specific areas and not leave that area for another, and by staying local it works to create more wealth for those in the community. Whereas the national currency drains out of the economy when it is spent at a non-locally owned business, or on goods and services that are sourced from outside of the community, local currencies remain where they are, increasing the liquidity of the currency. The effect of complementary currencies working to keep currency within a specific area longer is called a "multiplier effect".

3. Reduction in fees and interest becomes profit

The money saved by not paying perpetual interest becomes an addition to people's income and their profit. The currency cycles back into the community and everyone benefits.

4. Increased possibility of local import substitution

By encouraging locally-generated business, goods and services that were formerly sourced from outside the locality may be substituted by goods and services produced from within the locality. National and multinational corporations are unlikely to accept complementary currency in payment, due to the impossibility of repatriating profits.

5. Increased employment opportunities

By providing a new market for goods and services, the participants in the system offer what they want, rather than being forced to perform work that they would prefer not to do if they had the choice. As well as discouraging harmful activities simply for currency, local currencies give their participants a safe way of trying out their new employment choices.

6. Increased importance of traditionally undervalued activities

Community members themselves decide the value of such things as childcare, artisan skills or community organizing. In particular, this gives them the opportunity to reassess the value of female dominated work, either undervalued or not valued in the larger market economy.

7. Discouragement of environmentally destructive activities

Without the payment of interest to encourage environmentally destructive activities for its monetary value, there is no incentive to cut down a tree today in order to begin accumulating interest from its sale. Indeed, in some systems where a negative interest rate is used, future units of complementary currency are worth more than those exchanged today. This encourages activities which will facilitate future exchanges, such as planting trees.

8. Increased support for small enterprise development

Rather than relying solely on a high-interest commercial loan, entrepreneurs are able to procure at least part of the goods and services they need for startup simply by making a commitment to supplying the fruits of their labor to the community sometime in the future.

9. Increased strengthening of social relationships

Complementary currencies are designed and intended to help the members of a society to overcome social inequities based on wealth. An intricate social network is reinforced/created as a by-product of members meeting to value and exchange each others' goods and services. In an indirect way, it may be exactly these social benefits which determine economic success over the long run, such as has been shown by the lending circles program and resulting community cohesion.

10. Counter-cyclical economic tendency

According to a study of business inter-trading systems in America, complementary currencies exhibited a tendency to increase during economic downturns, which concludes by supporting the introduction of complementary currencies in areas hit by economic recessions or depression.

11. Money stays local longer, reducing need for external input

The less currency that is flowing out of a local community, the less that needs to flow back into the local community.

12. Multiplier effect from increased circulation

The more currency that stays in a community, the greater the spin off benefits from the circulation of the currency.

13. Using complementary currency saves national currency for non-local purchases

This means increased local capitalization and personal savings, or disposable income.

14. Reduced need to migrant to urban areas in a search for currency

If there is enough income to mobilize local production using local resources to meet local needs, people do not need to leave small communities for the urban city in order to earn currency.

15. Fostering local self-reliance and individual self-esteem

By meeting local needs using local resources, people are active in helping each other. Many people structure their time and value their lives through their work, leading to happiness and increased self-esteem.

16. Decreased gap between the richest and poorest members of a community

When the lower-income people in a community have access to a local means of exchange and possibly increased access to capital, the gap between the richest and poorest members of a community decreases.

17. Access to credit at very low rates

Lowering the barriers to accessing credit means more opportunities for people.

18. Increased access to the local market

By creating a new free market for the exchange of goods and services, participants in complementary currency systems have a new and stable market for the goods and services that they offer.

19. Increased purchasing power at the local level

An increased currency supply means increased purchasing power at the local level.

20. Promote Cash Flow Optimization

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