QuestionsA. Understanding, Analysing and Researching the Community
1. How do I determine what system is best
for my community?
1. Where can I find materials related to the
theory of local currency systems?
1. How do I correct a system imbalance / inflation
in a local currency system?
A. Understanding, Analysing and Researching the Community
Your research should seek to identify as wide a range as possible of participants in your local currency system, seek opportunities to bring in more participants so that there is a wide range of goods and services to trade. Each of the participants should know what they get from the system, by giving to the system. Similarly, vertical supply chain networks involve making 'buying agreements' from the primary producer, through the wholesaler to the retail level. Seek to organize your system both horizontally and vertically. For more information, see the materials section or this document on Solidarity-Based Productive Chains, as well as the Consumer Commerce System described below.5. What are the legal issues of implementing a local currency system?
Most local currency systems operate without encountering any legal obstacles. Locally-circulating, non-convertible means of exchange operate in more than 35 countries worldwide. However, it is a good idea to research the legal issues of alternative means of payment. As we work with more advanced local currency systems, the Strohalm Foundation has been conducting this research in a number of countries, and can point you in the right direction.6. What general factors may influence the success of a Local Currency System?
B. The Theory of Local Currency Systems
You may also be interested in seeing a range of Local Currency Systems presentated according to a general typology. For a description of this range, see these documents: CCS: A Cooperative Option for the Developing World?, or An Overview of Parallel, Local and Community Currency Systems.
It would be best to talk with us about the design of your system before you design the note that will circulate in it. See the Image Gallery section for ideas.
C. Understanding Financing of Local Currency Systems
Negative Interest (Demurrage): a charge of between 6 and 12% per year on the circulation of money, charged on a specific date to those who are holding the currency.
Periodic Flat Fees: a flat charge applied monthly, bi-monthly etc to all members.
Transaction Fees: a flat charge applied to each transaction.
Conversion Fees (Malus): a charge applied at the time of conversion of local currency for national currency.
Other fees can be charged on advertising, marketplaces, brokering.2. External Funding
D. Understanding Administration of Local Currency Systems
Your assistance is requested to help complete this section. Most Local Currency Administrations have a: Administrator, Trustee, and Accountant. Other positions may include: Trainer, Membership Coordinator, Marketplace Organizer, Price Controller, Trade Facilitator.2. Inter-Local (Regional) Administration
E. Solving Local Currency System ProblemsHow do I encourage people to spend their positive balances?
The range of goods and services needs to be increased. This can be done by organizing marketplaces. Also, people with high positive balances can be asked to stop trading for a while, until their positive balance has been spent down to a more acceptable level for the system.3. How do I encourage people to repay their negative balances?
A new rule requiring people to make up their negative balance before they leave the system is needed. This can take the form of a formal Credit Arrangement.4. How do I encourage enough people to join so that my local currency system is self-financing and sustainable?
Local currencies also need value, backing and a reason to circulate. A currency that is handed out for free tends to have little value. A currency backed by a promise without force may be a weak form of backing. If both of these are the case, the currency has little reason to circulate, and the system has little reason to grow.