Community currencies are economic, policy and social instruments that complement conventional money and address issues that are not commonly addressed by current monetary systems. Unlike internet-based cryptocurrencies such as Bitcoin, these so-called complementary or community currencies are often centred around a specific region or conviction. In recent years, the idea has spread all over Europe as a counter reaction and alternative solution to austerity measures, also aided by technological advances. To meet continuing socio-economic challenges local authorities and municipality are turning to innovative approachessuch is the community currency.
Some designs wish to demonstrate new methods of issuing money, while others wish to move towards an ecologically-sustainable steady-state economy, encourage cooperation and reciprocation, self-reliance and mutual aid, local production, micro-small enterprise development, urban revitalization, socio-economic solidarity. By their nature, each community-based currency remains small enough not to fall under official financial regulations. However, the number of community currencies have already grown from a few hundred to a few thousand over the last ten years.
According to the graphic Germany has the highest number of complementary currencies, but Spain has the most users.
In order to better understand and study this phenomenon the European Union has financed a series of program with the main task to research, analyze and evaluate but also facilitate the impact and effects of community currencies and new similar financial tools.
D-CENT (Decentralised Citizens ENgagement Technologies) was a Europe-wide project bringing together citizen-led organizations that have transformed democracy in the past years, and helping them in developing the next generation of open source, distributed, and privacy-aware tools for direct democracy and economic empowerment. The project started in October 2013, receiving funding from the European Union’s Seventh Framework Programme for research, technological development and demonstration for a total budget of 2.5 million, and ended in May 2016.
D-CENT promoted a series of research to investigate the potential of blockchain technologies seeking an understanding for their functional value within the social practices (Digital social currency infrastructure); to analyze the state of the art of legal frameworks of implementation both in general, but also particularly for D-CENT Digital Social Currency experiments with pilot communities in Spain, Iceland, Finland and the use case in Italy (Framework for implementing alternative credit schemes and digital social currencies); to implement an open-source approach to decentralized complementary currency design, dealing with the designing of tools for collective engagement and decision making on monetary economic matters affecting their communities (Design of social Digital Currency) and to build a framework for implementing and federating digital complementary currency experiences, and to their social benefits, enabling communities to manage exchange using alternative digital social currencies as new tools for growing a civic sharing economy, including a strong role for interoperable digital social currencies (Field research and user requirements digital currency pilots). Furthermore, D-CENT launched Freecoin, free and open source. A toolkit to let people run reward, remuneration and incentive schemes that are transparent and can ben inscribed in different blockchain backends. Organizations can design and run rewarded schemes that use digital currencies and vouchers, and that are transparent and auditable. It is a software codebase to operate Trust Management Systems among individuals and organizations.
In 2012, another project, Community Currencies in Action (CCIA), was launched in the cohesion policy framework and co-financed by the EU’s European Regional Development Fund for EUR 3 126 979 from the Operational Programme “North West Europe (NWE)”. The project run from 2012 to 2015 and was the biggest ever transnational project in the community currency field. It aimed to design, develop and implement community currencies across NW Europe and provide a rigorously tested package of support structures serving CC-practitioners and the general public. Knowledge transfer across the partnership was the main goal to drive the innovative development of a centralized, formalized and empirically-driven set of tools that can be picked up and used by various governmental and non-governmental actors at a community level and that provides a rigorously-tested package of support structures to facilitate the development of CCs across NWE as well as promoting CCs as a credible vehicle for achieving positive outcomes.
The project supported six community currencies pilots among Europe and develop a series of practical tools useful for future project on that field. Community Currency Knowledge Gateway is a gateway to online resources, literature and general knowledge on community and complementary currencies that was developed by the Community Currencies in Action EU Interreg project in 2014 and maintained by international partners and volunteer contributors. It is a crucial element to share and make available knowledge on the subject for other possible partners and communities. The monitoring of the six pilots allowed the publication of many research on the subject and the creation of toolkits for further projects. Among these, it is possible to list instruments for the evaluation of a community currency, frameworks and resources for local currency implementation, detailed compliance documents on legislation but also resources for publicizing a community currency to help in the communication with users, other stakeholders and general public. In the framework of CCIA the software QoinWare was developed as the ICT platform for community currencies. It was used by the pilot projects, with the focus on creating an optimal user experience, using both web and smartphone interfaces.
One last project this article is willing to analyze is Digipay4Growth, co-financed by the EU Commission for EUR 3 030 000 (years 2014-2016) is still running on the personal initiative of the pilot projects. The project applies an innovative Digital Payment System, Cyclos, to channel inflows of purchasing power from various sources towards SMEs in the regional/local economy. It involved 4 pilot projects: in Sardinia (Sardex network, Italy) Santa Coloma (Catalonia), Bristol (Bristol Pound, UK) and various locations in the Netherlands. According to the Social Trade Organization 12,000 participating SMEs benefitted from 7 million credit, €140,000 additional turnover and purchasing power moving 5 times quicker than the Euro. Having a more in deep look at the data concerning the pilots it is possible to notice that in Sardinia a network of 4000 small business members benefits from approximately 20% increase in yearly turnover, and 65% decrease in loan defaults. Together, these 4000 businesses added 40% to the overall economic growth of Sardinia in 2016. The Spanish example has shown that subsidies and civil servants’ salaries can be channeled through Cyclos while in Bristol, Cyclos facilitated the payment of local taxes, services from local government and transport for a total amount of 1.18 million channeled this way.
These projects are among other EU co funded ones that aim to study the development of new ways of digital payment and complementary currencies and their effect on real economy. Scholars such Dr. Georgina Gómez, from Erasmus University, believe that we are in the midst of a wave of growth in these schemes as people realize that they can tackle climate change by promoting sustainable behaviour or help to integrate refugees into European society.
Dr. Jose Luis de La Rosa Esteva, from the University of Girona, interviewed companies involved in alternative currency schemes that have been designed to help support local businesses in the framework of the EU project VirCoin2SME. He argues that the idea behind these types of schemes is that they encourage people to shop locally and that complementary currencies create a circle of purchases which lead to an increase of up to 10 % of the turnover of companies.
Author: Flavio Previtali