T AKING COMPLEMENTARY CURRENCIES AND MONEYLESS TRADING TO A NEW LEVEL.

The Exchange Revolution

TAKING COMPLEMENTARY CURRENCIES AND MONEYLESS

TRADING TO A NEW LEVEL

Primary Reference Taking Moneyless Exchange to Scale:

Measuring and Maintaining the Health of a Credit Clearing SystemBy T. H. Greco. International Journal of Community Currency Research 17 (A) 19-25 <www.ijccr.net>

Explains the causes of (1) the “pooling” of credits, (2) stagnation of circulation, and (3) failure to thrive.

Prescribes policies to be applied in credit allocation. Describes metrics that are important in assessing

the performance of individual member accounts and in monitoring the overall health of a credit clearing system.

24 July 2015Thomas H. Greco, Jr. 2


Find it here…

Greek translation needed.


GiftVoluntary, free

Reciprocal ExchangeEqual exchange of value between two

parties by voluntary agreement.

CoercedAppropriation

theft, robbery, extortion, taxes.

Transfer of Value

FORMAL – MONEY------------------------------------

INFORMAL

Promising Developments

Free and independent approaches to exchange based on voluntary participation involving

◦ Grassroots organizations◦ Cooperatives◦ Business Associations◦ For-profit enterprises ◦ Municipal and provincial governments◦ NGO’s

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Why Complementary Currencies?Decentralized Exchange and Payment Options Can Provide: Greater local community resilience and

self-determination. Insulation against systemic monetary

dysfunction and instability. Greater harmony, equity, social justice,

and quality of life for all.

Currency SOLD for cash Toronto Dollars, Salt Spring Dollars, Berkshares,

Brixton Pounds, Bristol Pounds Currency DISTRIBUTED with no formal

obligation to reciprocate Ithaca HOURS and many other hour-based

currencies Currency SPENT into circulation as a

credit obligation LETS, WIR ,TEM, Mutual Credit Clearing Systems,

Tucson Traders, Commercial Trade (Barter) Exchanges


Types of Complementary Currencies

8

GrassrootsVoluntary

Social Action

CommercialFor-profit

Business-to-BusinessExchange

Main Currents of Alternative Exchange

Barter Exchanges

Trade Exchanges

Mutual Credit/LETS/TEM

Community Currencies 24 July 2015Thomas H. Greco, Jr.

Thomas H. Greco, Jr. 924 July 2015

Evaluating A Currency Questions That Should Be Asked

Who is the issuer? How is it issued into circulation? What is the basis (foundation) of issue? What is the amount currently in circulation? What are the terms of the (explicit or implied) contract

offered by the issuer to the users of the currency, i.e., ◦ What does the issuer promise? ◦ What is the form of redemption? ◦ What are the limits, if any, on the amount that may be issued? ◦ What is the duration of the contract? Is there an expiration

date? ◦ Are there any fees, conditions, or limitations associated with

redemption?

1. Assure reciprocity2. Maintain the value of system

credits or currency3. Provide desired goods and

services at everyday prices (same as cash prices)

What an Exchange System must Achieve


Thomas H. Greco, Jr. 1124 July 2015

What Makes a Currency Credible and Sound? Spent into circulation by trusted issuers, On the basis of goods and/or services available in

the market, Amount issued must be in proper proportion to

anticipated sales or revenues. The issuer must agree to receive the currency in

payment at par (face value) without restrictions. Others must be free to refuse the currency or

accept it at a discount from par. There must be no forced circulation (legal tender).

Open and transparent operation and management, including the amount of credits or notes in circulation.

Requirements for a Sound Currency or Credit System

Proper basis of issue of credit Rapid rate of credit reflux (circulation) Competent, honest, and transparent

management Revenues adequate to cover operating costs Effective oversight and participation by the

members/users

1224 July 2015Thomas H. Greco, Jr.

NetworkHub

Cashless Trade

Network


The next generation of moneyless exchange must address:

Design issues – System Architecture Management issues Financing Implementation strategies Marketing Obstacles and Possible Threats Context and Timing

“Change occurs when there is a confluence of both changing values and economic necessity, not before.” -- John Naisbitt


A Business Plan

1. Optimize exchange system architecture,2. Greatly expand the membership foundation of

small businesses and existing social groups,3. Allocate credit to members according to their sales

volume,4. Adopt uniform standard operating procedures

among exchanges to assure5. Trade credit value equalization6. Organize local trade exchanges into wide area

trading networks7. Adopt convenient point-of-sale payment

mechanisms

Credit Clearing—Realizing the Full Potential


Why Community Currencies Often Stagnate and Fail to Thrive

Failure of reciprocity (non-redemption)◦ System design deficiencies

Improper basis of issue

Over-issuance

Lack of clear agreement between issuers and users

◦ Management issues Lack of accountability and transparency

Inadequate management procedures and controls

Overreliance upon volunteer administrators

Failure to respond to internal or external threats


Why Community Currencies Often Stagnate and Fail to Thrive (Continued)

Scale and scope◦ Failure to achieve critical size of the participant

base

◦ Too narrow an assortment of goods and services being offered

◦ Failure to attract participants from all levels of the supply chain (production/distribution circuit)

◦ Failure to gain wide acceptance within the established business community (especially locally owned SMEs).


Currency SOLD for cash Toronto Dollars, Salt Spring Dollars, Berkshares,

Brixton Pounds, Bristol Pounds Currency DISTRIBUTED with no formal

obligation to reciprocate Ithaca HOURS and many other hour-based

currencies Currency SPENT into circulation as a

credit obligation LETS, WIR ,TEM, Mutual Credit Clearing Systems,

Tucson Traders, Commercial Trade (Barter) Exchanges


DesignTypes of Complementary Currencies

The most empowering form of currency monetizes local value-added:

SPENT into circulation As a credit obligation By a single trusted issuer or by the associated

members of a credit clearing exchange, When real value (goods and services)

changes hands.Need to assess creditworthiness and set balance limits on each account.


Design (continued)


Credit AllocationPossible criteria

The sales performance ratio is computed by taking the average daily sales over some number of days and dividing that into the closing debit balance for the period.

Example: Maria has a balance of -200 and average

daily sales of 25.200/25=8 days to clear her balance.


Performance Metrics

Need to provide high quality of service and be responsive to clients’ needs.

Need to provide adequate compensation to administrative staff and the system developers.(Should not rely too much upon volunteer labor).

Maximize Openness, Transparency, and Accountability.


Management

Basic requirements Need to have adequate start-up capital. Need to generate sufficient revenues to

cover the costs of operation, including a Reserve account for “bad debts.”

Revenue sources

Service fees on

Membership, Transactions, Advertising, and Brokerage service.


Finance

Need to be part of the mainstream community economy (Core SMEs)

Need to achieve critical mass SCALE – big enough to provide members/users

with significant number of buying/selling opportunities

S C O P E – wide range of goods and services available

Need to make participation easy, convenient, low cost and virtually risk-free.

Try to include all levels of the supply chain.


Implementation Success Factors

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RetailersWholesalers

Manufacturers

Basic Commodity Producers

Employees/Consumers

Include all Levels of the Supply Chain

Thomas H. Greco, Jr.

• Phased implementation as part of a comprehensive bioregional economic development plan.

• May include rebate rewards/loyalty schemes.

• May be part of a “buy-local” campaign

• Attach credit issuance to community improvement or charity schemes, e.g., Community Way.


Implementation Strategies (2)

1. Promote import substitution by connecting local demands with local sources

2. Organize a credit clearing association to provide a means of payment that is independent of any political currency or banking establishment

3. Issue a supplemental regional currency4. Develop social capital and basic support structures

that strengthen the local economy and enhance the community’s quality of life

5. Develop an independent value standard and unit of account


A 5-stage Regional Economic Development Plan

Need to clearly state the value proposition:

Easier access to exchange credit (working capital) at no interest cost

A stable and sustainable means of payment that remains in the community

Reduced need for cash

Enhanced opportunities to sell excess capacity

More customers and additional cash business

A loyal customer base

Reliable non-cash suppliers.

Overall improvement in local prosperity and quality of life


Marketing

Those that govern: money transmission, gift cards and other prepaid access

instruments, electronic funds transfers, anti-money laundering, counter-terrorist financing, gambling, banking and lending, and import and export restrictions.


Laws and Regulations that need to be considered

Thomas H. Greco, Jr. 30

Universal acceptance within wide domains (national or global).

Easy exchangeability (well developed currency exchange markets).

Inertia - The public is habituated to their use. Lack of exchange alternatives. Recognition by, and support from

governments—legal tender laws, restrictions on competitors.

Their true costs and “side-effects” are obscured and unrecognized.

24 July 2015

The Main Features Of Political Monies That Make Them Dominant In The Market Are:

References and ResourcesExplore the website and blog:

http://beyondmoney.net http://www.ReinventingMoney.com

Read: The End of Money and the Future of Civilization Money: Understanding and Creating Alternatives

to Legal Tender especially Chapters 14 and 17 Money and Debt: A Solution to the Global Crisis

all by Thomas H. Greco, Jr. Flight From Inflation and Private Enterprise

Money by E. C. Riegel


T AKING COMPLEMENTARY CURRENCIES AND MONEYLESS TRADING TO A NEW LEVEL.

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