Worldwide Help Desk on Local Currency Systems
Frequently Asked Questions

Questions

A. Understanding, Analysing and Researching the Community

1. How do I determine what system is best for my community?
2. How do I conduct a simple survey or analysis of my community?
3. What are people doing, what projects are underway in other places?
4. How do I set up a local currency system?
5. What are the legal issues concerning the implementation of a local currency system?
6. What general factors may influence the success of a Local Currency System?

B. The Theory of Local Currency Systems

1. Where can I find materials related to the theory of local currency systems?
2. Where can I find materials which introduce local currency systems?
3. What are some different types of local currency systems?
4. What are some good books on local currency systems?
5. How do I design a local currency note?
6. What are the general arguments against Local Currency Systems, and how do I answer them?
7. What are the general benefits of Local Currency Systems?
8. What are the general objectives of Local Currency Systems?
9. What are the principles of Local Currency Systems?

C. Understanding Financing of Local Currency Systems

1. What are some examples of internal cost-recovery mechanisms?
2. Where do we start looking for external funding?

D. Understanding Administration of Local Currency Systems

1. What is the usual structure for a local currency administration?
2. How do we link our mutual credit system with a neighbouring one?

E. Solving Local Currency System Problems

1. How do I correct a system imbalance / inflation in a local currency system?
2. How do I encourage people to spend their positive balances?
3. How do I encourage people to repay their negative balances?
4. How do I encourage enough people to join so that my local currency system is self-financing and sustainable?


Answers

A. Understanding, Analysing and Researching the Community

1. How do I determine what system is best for my community?

Community Assessment
Situation Assessment
Materials Section
If you wish to discuss this with us, please fill out the Assistance Agreement and mail it back to us. This form has questions for you to answer which will help us to identify systems you may be interested in implementing.

2. How do I conduct a simple survey or analysis of my community? Community Economic Mapping
Community Assessment
Situation Assessment

3. What are people doing in other places?

Database on Local Currency Systems Worldwide
Local Currency Systems in Asia
Local Currency Systems in Africa
Local Currency Systems in Latin America

4. How do I set up a local currency network, not only horizontally between producers and consumers, but vertically involving supply chains?

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?

General Factors Which May Influence the Success of a Local Currency System

B. The Theory of Local Currency Systems

1. Where can I find materials related to the theory of Local Currency Systems?

Materials Section
Links to Other Sites

2. Where can I find materials which introduce Local Currency Systems?

Introduction to Community Exchange Systems
Introduction to Appropriate Economics
Background Documents (Materials Section)
Participatory Learning and Action Tools for Trainers

3. What are some different types of Local Currency Systems?

Community Cooperation System
Marketplace Currency System
Valuable Local Currency System
Bonus Modified Microfinance System
Mutual Credit System
Consumer Commerce Circuit
School Coupon System

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.

4. What are some good books on local currency systems?

  • Lietaer, Bernard. The Future of Money. Century, London. 2001. (search for this book at http://amazon.co.uk)
  • Greco, Thomas. Money: Understanding & Creating Alternatives to Legal Tender. Chelsea Green, Vermont.2001. Can be ordered from most bookstores, see the condensed version in the Materials Section.
  • 5. How do I design a local currency note?

    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.

    6. What are the general arguments against Local Currency Systems, and how do I answer them?

    General arguments against local currency systems, and how to respond to them.

    7. What are the general benefits of Local Currency Systems?

    Benefits of Local Currency Systems

    8. What are the general objectives of Local Currency Systems?

    Objectives of Local Currency Systems

    9. What are the principles of Local Currency Systems?

    Principles of Local Currency Systems

    C. Understanding Financing of Local Currency Systems

    1.Internal Cost-Recovery Mechanisms

    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

    Proposals
    Funders

    D. Understanding Administration of Local Currency Systems

    1. Local Administration

    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

    Inter-linking, Inter-Trading and Networking Mutual Credit Systems

    E. Solving Local Currency System Problems

    1. How do I correct a system imbalance, or inflation in a local currency system?

    Correcting System Imbalances

    2. How 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.