Japan ” tried the classical solutions, and after five years, they stopped believing the economic downturn was a cyclical thing, that it was like all the other ones. That’s when they started implementing these structural kind of solutions, which is why Japan is a full-scale laboratory of complementary currencies. However, Japan still haven’t gone to scale yet. They’re still experimenting. My suspicion is in the next two to three years, Japan will announce 10,000 local currencies, or a national B2B currency, and they’ll tell the world they’ve changed their development model. In Europe, we’re trying to experiment with taking complementary currencies immediately to scale. By the end of 2010-11, we hope to have a B2B system that is available at the Euro-zone level.”
Excerpt from a longer interview with Belgian monetary reformer Bernard Lietaer:
TRACY: How can complementary currencies help solve these problems?
BERNARD: Complementary currencies work in addition to existing money, rather than replacing existing, official money. There are whole different families of complementary currencies. One of them is local currencies. One is regional currencies. Another is functional currencies. Another is social-purpose currencies.
Today, conventional money is supposed to be doing everything. By adding in complementary currencies, you actually get different types of things and different outcomes from different complementary currencies.
If you want to create or bolster a local economy, you can use local currencies to stimulate that kind of outcome. A local currency has been proven effective only for up to 300-500 families, within a particular part of town.
If you want to help mitigate unemployment, I would recommend regional currencies. Regional currencies could work for a million people. The purpose there is to create a sense of regional pride and to encourage economic development on a regional level. We have a number of regional currencies operational in Europe. There are 64 projects in Germany, of which 28 are operational and the rest are in process of launch. There are six projects in France that are now in pilot stage..
There are also social-purpose currencies. There is one in Japan that people use to trade elderly care. The Time Dollar system in America is another.
Global currencies can be complementary as well. The Terra is one such example (see www.terratrc.org).
TRACY: On a bigger level, you’ve been saying that the Terra and Business-to-Business or B2B currencies could help us navigate this economic crisis we’re in. How do you get people to start accepting them?
BERNARD: The Terra is a subset of Business-to-Business (B2B), and I would recommend implementing first a B2B when it comes to addressing this crisis. Being optimistic, it would take at least three to five years for the Terra to make a difference. The B2B could be operational in three to six months.
The prototype of a successful B2B is the WIR system in Switzerland, which has been proven to help keep the country’s economy and employment more stable than all its neighbors since it was started in 1934.
The B2B keeps the businesses interconnected and trading with each other without borrowing money from the banks, which is the real bottleneck. Because the money is not anymore available from the banks as it used to be, period.
TRACY: How could we start a B2B currency this quickly? And how could we get it to be a national movement in the US?
BERNARD: We’re starting a B2B currency here in Europe. I was just at a meeting today at one of the pilot programs in Germany. They are considering calling it the “Com” for complementary and commercial—one Com equals one Euro, and it doesn’t have interest. There are now four pilot projects in gestation in Europe.The idea is to launch the pilot projects independently of each other and then interconnect them in 2010.
One of the main reasons we can do it so quickly is that thereare open-source softwares available for free, to make it all work. That solves much of technical problem.
Therefore, the only thing to be done is the social part, i.e. convincing businesses to be involved. Let me give you an example of how that might be done.
If one of your biggest customers tells you “We are going to buy from you at the condition that we can pay 10 percent with this new Com complementary currency.” As a supplier, when your biggest customers tell you that, you basically have a choice. You don’t have this big customer, or you accept the 10 percent payment in Coms.
The pilot projects are the beginning of the process. As we start to interconnec them on the European level, throughout the Euro-zone, there will be 16 countries that are using the same currency, all connected by the same software.
One of the key elements is transparency. With the Com system, I have the right to see your account before I make a trade with you. In other words, so it’s self-policing. That will make it very unattractive for the mafia and anyone else interested in criminal activity.
You can implement a B2B currency with same pricing structure and the same marketing mechanism and everything else. It simply offers an additional source of funding. The hope and idea is that at some point, at least during the period of the crisis, governments—particularly local and city governments—will accept partial payment of their taxes in the B2B currency, making it acceptable to everybody.
TRACY: Well said! Do the B2B currencies stop stupid growth?
BERNARD: For example, we can have currencies that motivate you to put less carbon in the atmosphere. There are now six cities in Europe that are planning to launch a carbon currency to do just that—Bristol, Dublin, Munich, Rotterdam, Brussels, and Amsterdam.
TRACY: How does that one work? Is this different from the cap-and-trade system we read so much about?
BERNARD: Oh, yes. Cap and trade involves basically only corporations and governments. The consumer is not involved. Here we’re talking about actually motivating the citizen/consumer to get involved.
Let’s assume that you take the bus or the subway instead of your car. Well, we give you credit for the carbon units that you’re saving with your ticket. It’s all done electronically, using a “smart” card [that works much like a standard credit card with a rewards program]. You want to go buy a bicycle? You can pay for the bicycle with the carbon credits. Or if I install solar panels in my house, I get carbon credits, which I can then use to take the subway.
The way that the US some state governments try to motivate people to buy a hybrid car is that they give you two- or three-thousand dollars in a tax rebate when you buy a hybrid. You can then use those two- or three-thousand dollars to go to Hawaii and emit more carbon than [you would save in the life of driving that hybrid]. So the government has no way of influencing behavior patterns after the first transaction.
The carbon currency works only in carbon-producing activities. So you create and economy that favors that activity. That’s an example of a complementary currency that actually encourages smart growth.
TRACY: What do you think individuals can do, here in the US, as we’re headed toward an unprecedented crisis?
BERNARD: If you’re a business manager, start a B2B currency. There are models available. We’re not talking theory: It’s been done before, and in Europe, we’re in the process of doing it again.
If you are a mayor, or a state governor, obtain the permission to accept such B2B currencies in payment of local taxes. You can choose the criteria that makes that currency acceptable for partial payment in taxes. This will provide the most powerful incentive for other businesses to accept that currency, and it will provide you with city and state income that you otherwise wouldn’t have.
If you’re an individual, gather your community, and create your community, to help build social capital.
In Brazil, the central bank is now helping to launch 150 dual currency banks to solve local problems, at the rhythm of 10 per month. In communities that have little money, survival is about the social capital. You can solve problems together that you can’t do alone. There are complementary currencies to achieve that as well, like Time Dollars. It doesn’t have any meaning to accumulate lots of Time Dollars, but the relationships you establish within a Time Dollars network are important. And local complementary currencies are very easy to start!