Photo credit: Images Money
One currency seems not to be able to serve every human need alone. When the money dries up, people go hungry and sleep rough, factories lay idle, and the fabric of society starts to tear apart.
This much became obvious when Greece filed for bankruptcy. With over half of the country’s young people without jobs, unemployment is more than a statistic: it is tangible. Anyone who takes a walk can see that money has become too scarce to allow the economy to do its job – matching supply and demand.
But what could the Greeks do? They appeared to have only two options: leave the euro at great expense and uncertainty, or subordinate their democratic will to the demands of those for whom money counts, rather than prosperity. The constant flow of euros entering Greece through loans, and flowing out again to pay for imports and to repay the debt, should have kept the economic mill wheels turning. But when extrinsic finance dries up, does economic activity have to grind to a halt? Are there no more needs to be met by underused assets?
The city of Volos in Greece did suggest an alternative option: a group of people there created their own currency to keep the wheels in motion. The TEM stands for that idea by its name – it is the abbreviation of the Greek for "new economic unit". It hit the local markets – and also the international news – as if it was a brand new idea. It wasn’t. There has long been a niche tradition of so called "complementary currencies"; apparently spontaneous monetary alternatives which have always filled the gaps when national currencies failed, typically in times of acute economic crisis – or is it better to say monetary dry-spells. During the Great Depression, many towns and cities across the USA issued what would become known as stamp scrip. There are textbook examples from the same period in Europe, such as in Wörgl in Austria, which escaped the economic downturn with the help of a local currency until the central bank stepped in, still afraid of loosing the reins again so shortly after the recent hyperinflation.
One system survived, however, and will celebrate its 80th birthday this year, vital as ever. The Swiss WIR, German for "we" but also the abbreviation for Wirtschaftsring or economic circle, was started by a handful of local entrepreneurs who issued their own credit, which today is used by around 60,000 SMEs all over Switzerland, and has a turnover of more than 1.5bn Swiss francs. WIR is an additional, anti-cyclical option for Swiss businesses to use when loans in national currency are too expensive.
There may be lessons we can learn from the 1930s, from Volos and from other similar experiments around Europe. Could an integrated system of currencies, different in scale and scope and governed in a bottom-up fashion, provide the way forward for southern European states, providing liquidity without alienating their northern partners? Is there something in this as well for northern regions of the UK which seem to be in a similar relationship with the City of London as that of Greece and the European Central Bank?
How many currencies does it take to have a vital and resilient economy? And on the other hand, how many does it take to end up in economic balkanisation? Current events suggest that one currency cannot be enough. And allowing a range of new currencies for regions or sectors where the single currency is failing to do its job does not mean the end for the euro; in fact the new currencies would help to facilitate exchanges where few would occur otherwise. The core idea of multiple, complementary currencies is not protectionism and fragmentation, but a buttress to the European ideals of pluralism and subsidiarity.
Now, when the Bristol Pound emerges, or when the business-to-business currency SoNantes is introduced for the businesses around the French city of Nantes, commissioned by a former mayor and former French prime minister Jean-Marc Ayrault, the idea gains further weight for sustainable economic development, rather than just for crisis mitigation. Even the EU is supporting these community currency pilots in the search for new monetary innovations which go a little beyond the current dichotomy of debt or austerity.
And while new technologies like peer-to-peer payment systems and smartphone wallets displace our lurking memories of plentiful foreign coins in travel pouches, this new multi-currency will not wait for a democratic invitation. Amazon coins, Facebook credits, Nectar points, Google Wallets, bitcoins – the command of currency is already shifting away from the banks we think we know. I believe I am the first PhD student to pay their fees in bitcoins. Crisis or not, we need to reconsider money as the social technology it has been, and think which will serve the real economy best when it is governed by those whose needs and capabilities it should match.
Greece is the first country to be reclassified from a "developed nation" to a "emerging market". But what exactly might be emerging out of this crisis? In ancient Greek the word "krisis" means choice. What if we allow ourselves a choice about the kind of economies we use, and the kind of currencies we create to facilitate them?
