It’s not every day you hear a former central banker and an architect of the euro advocating for complementary currencies that have nothing to do with the national ones we call money. But that’s exactly what Bernard Lietaer does in his book Rethinking Money: How New Currencies Turn Scarcity Into Prosperity.
He argues new monetary tools are needed to avoid repeated financial meltdowns and fiscal crises like we’ve seen in the U.S. and Europe.
“There’s nothing wrong with a hammer when you are dealing with nails,” Lietaer tells The Daily Ticker. “However I think we are dealing with a broader set of issues than one single type. Therefore, I think it’s time to look at other possibilities; complete the toolset. If you want to do a paint job it’s a good idea to have a paint brush.”
Lietaer says in complementary currency terms, a “paint brush” is a standard medium of exchange functioning in parallel with conventional money. If that seems alien, Leitaer gives the example of frequent flier miles as a relatable example.
For an example of the real life currency kind, you can look to the WIR. It’s a business-to-business currency in Switzerland which started in the 1930s, and it’s the country’s “secret weapon” to better stability during tough times, according to Lietaer.
When some businessmen in the 1930s had credit lines from their banks cut, they created a mutual credit system among themselves to conduct business, inviting clients and suppliers to join. Even in modern days, during recessions when bank loans decline, businesses use WIR to pick up the slack. That’s how it helps to smooth the tough times, says Lietaer. He reports about 600,000 mostly small and medium-sized Swiss businesses use the WIR, or about 16% of businesses, with a volume just under $2 billion annually.
Meanwhile, in the U.S., this month we’ve seen Virginia legislators vote to study the feasibility of minting a metallic-based monetary unit of the state’s own. And according to CNN, since the financial crisis a growing number of communities have introduced local currencies. For example, the Potomac in Washington D.C. was introduced in part to help more money stay in the local community.
For his part, Lietaer gives the example of time banks, where 286 systems across the country including TimeBanks NYC allow people to provide help, support ,and services to one another by using time instead of money as currency.
He thinks it’s time to complete the “toolbox” and adopt more of these types of alternatives.
While Lietaer was a co-designer of the ECU, the European Currency Unit, the precursor to the euro which brought many currencies into a single monetary system, he acknowledges the irony that he now advocates alternative currencies from the regional to global level.
Now he sees complementary currencies running parallel to national money at all levels. He claims we need a global business-to-business currency that is nobody’s national money, and which programs multinational corporations to think long-term. Meanwhile, he sees complementary currencies providing value all way to a local neighborhood to help solve regional social problems.