1. Anne Snick*
Is a different kind
of currency possible?
In medieval times guilds used their own currencies for local
transactions. Monarchs eager to control the emerging middle class
replaced these moneys with their own “royal” currency. By requir-
ing taxes to be paid in their money, they forced local systems out
of existence. Now the opposite is happening. Officially only banks
have government “fiat” to create money recognized as legal ten-
der and required for paying taxes. Yet local moneys are emerging
worldwide. An important driver behind this is that citizens and
social-profit organisations have access to information and com-
munication technology (ICT) allowing them to create exchange
platforms.
Complementary currencies: great range and variety
Today there is no standardized definition of complementary
currencies. At one end of the spectrum are retailers’ fidelity sys-
tems. A customer is “paid” a point when she or he buys things,
and is incited with these points to buy again; consumer loyalty
increases profits. Other systems want to bypass bank power. With
Bitcoin’s block-chain technology transactions can be verified
without a central authority. Moneys at this end of the spectrum
increase the control of economic actors over (part of) the financial
system and strengthen their competitiveness, but don’t radically
question the assumption that “making money” is the aim. At the
other extreme are currencies with social or ecological aims, valor-
ising people’s contribution to them. In Local Exchange and Trade
*Anne Snick holds a PhD in Philosophy of Education (KU Leuven, Belgium). For the
last 30 years she has done research in the fields of social innovation and sustainable eco-
nomic models, using systemic analysis and transdisciplinary methodologies. With Bernard
Lietaer she co-authored a handbook for local authorities on community currencies. She has
been a Board Member of the Club of Rome-EU Chapter since 2012.

2. 56 POLITIQUE INTERNATIONALE
Systems (LETS) people mutually exchange services and share
tools, skills or other resources. Systems like Time Banks or those
initiated by social-profit organisations or public services valorise
volunteer work that fulfils local needs which the market does not
meet. Value is created each time people collaborate on this. The
points allow them to buy a service from each other or from local
providers.
On this “competitive-collaborative” continuum all varia-
tions are possible. Business-to-business currencies (e.g. WIR in
­Switzerland, RES in Belgium and Sardex in Sardinia) are created
to facilitate exchanges among SMEs and to offer them cheap credit.
They can be combined with a customer loyalty scheme. By invig-
orating the local economic fabric and shortening the supply chain,
B2Bs have a positive effect on social and ecological wellbeing.
Often citizens can use “collaborative” money for buying at local
SMEs. Loyalty schemes of retailers may credit points not just to
personal accounts but also to a community project. The design of
local moneys varies with context, needs, available resources and
vision.
A phenomenon on the rise
Since most local currencies are grassroots initiatives, official
records are unavailable. But all statistics show that their number
has risen quickly over the last decade; already in 2004 some
4.000 existed worldwide. In academia local money is now a spe-
cific field of study with its own journals and conferences. All this
indicates that, although under the radar of mainstream economics
and politics, decentralised money is taking root in the landscape.
Local moneys are valid only within a defined community (of
clients, citizens, businesses or social-profit organisations). Can
they change the dynamics of the current system and lead to a new
balance?
Currently governments give banks the exclusive fiat to cre-
ate money, and require taxes to be paid in this national currency.
These currencies (including the euro) are interchangeable world-
wide, and bankfiat money has become the main means of exchange
for the global economy. This causes extreme interdependency and
vulnerability, so the toppling of a US bank may cause damage
worldwide. As shown and developed in Bernard Lietaer’s article
in this review (1), fiat monopoly is to the financial system what

3. Anne Snick 57
monoculture is to an ecosystem: it seems efficient in the short
term, but is not resilient and makes the system vulnerable.
Banks are private companies selling financial services and
products with a view to making a profit. They’re not neutral agents
facilitating financial transactions of economic actors, but are them-
selves actors who treat other companies as competitors. They may
invent complex financial constructions to increase their profit at
the risk of others (think of collateralized debt obligations or credit
default swaps); they may speculate with their clients’ investment
money. Banks are competitors just like other companies but at
the same time have exclusive (fiat) power over the medium of
exchange in the competition. There is no “level playing field”.
Banks can afford to take huge risks and let governments pay the
damage, for they are “too protected to fail”.
Money is created when a bank writes out a loan only a frac-
tion of which is covered by its assets (Fractional Reserve Banking
or FRB). Adding numbers (digits) to clients’ accounts is in theory
unlimited, so financial growth is the rule. Debtors however have to
pay back the loan by participating in the real economy on a planet
with limited capacities. This creates an imbalance since outflows
are larger than inflows. This fuels fierce competition among eco-
nomic actors to get hold of economic resources at the lowest cost.
The imbalanced flows reveal this “growth” is a fiction, yet (by
bank fiat) it rules all human dealings.
Actors have to pay their debt back with interest (the bank’s
profit). Given “fiat monopoly”, debtors cannot create the interest
by adding digits to the bank’s account. Their only option is to
“extract” it from other actors, e.g. by lending their savings, via
profitable dealings with customers, workers or suppliers, by mini-
mizing taxes etc. This feature makes money structurally scarce and
fuels a worldwide rat race. Even people or companies with ethical
concerns will be tempted to buy cheap goods or resources which
may be produced under unethical conditions. National economies
must extract money from other countries to keep a positive trade
balance. Yet on a global scale it is impossible for all countries to
export more than they import; so the defence of national interests
will (have to) prevail on concerns for balanced global economics.
As a result, the current monetary system (here called F-money,
short for Fiat and Fictional growth) steers socioeconomic proc-
esses along “biased” paths, resulting in (predictable) escalating
loops that lead to tipping points.

4. 58 POLITIQUE INTERNATIONALE
Local currencies: a cure?
The features of F-money determine the capacity of the econ-
omy to be successful. The function of economics can be described
as the sustainable allocation of scarce resources to the needs of
all. This includes people in the global South as well as future
generations (so humankind can survive). It also includes other
species’ populations kept above critical levels, for the collapse of
one species may create a domino effect ending in mass extinction
including humans. This function refers to the real economy inso-
far as it concerns real (human or material) resources for fulfilling
the needs of real beings. Economic growth in any real sense can
only refer to increasing prosperity for all life on the planet. The
pursuit of (fictional) “growth” today turns into loss of prosper-
ity for life on the planet. Many decentralised moneys (here called
“collaborative and community moneys” or CCs) make common
wellbeing their aim.
Growth vs. prosperity
Since scarce money forces all actors to “earn interest” via
extraction and competition, “making money” has become the aim
of economics. Most indicators of growth are in financial terms, not
in terms of increasing prosperity. This effect is also felt at micro
level. F-money encourages speculation, e.g. by keeping houses off
the market to push prices up. Houses thus no longer meet a real
economic need (housing people), but become leverage for finan-
cial gains. It also harms the economic health of entire regions. Big
companies have more power to extract profits than SMEs. Large
food retailers for instance can force farmers to sell products at
prices that do not cover their production cost. This incites banks
to give only big actors access to credit and refuse it to SMEs. In
many sectors economic power gets concentrated in the hands of
a few corporations, creating “monocultures”: if a huge company
moves towards a low wage country, a lot of families in a region
lose their income.
CCs counteract this reversal in various ways. B2B money
may give credit to SMEs at no interest. SMEs accepting local
money attract extra buyers. CC’s can be earned by persons whom
companies deem “uncompetitive” but who are able and eager to
work for community goals. The points they earn may allow them
to buy things they could not otherwise afford. Systems such as

5. Anne Snick 59
LETS connect local talents to local needs without exclusion and
let all citizens contribute to local wellbeing.
Social insecurity vs. community goals
Given its scarcity F-money creates competition. Competi-
tiveness, individualism and private ownership have become “val-
ues” that drive behaviour. People with money can earn more, for
example by speculating on houses, thus forcing poorer families
to take higher mortgage loans, raising chances these families will
indeed default. Moreover, the profit-drive encourages companies
to move to low-wage countries or replace workers by robots, so
F-money causes unemployment. Governments cope with this by
redistributing money, which leads them to raise taxes. Taxes in
turn spur firms to move to countries with less social protection,
etc. So social “security” in fact indirectly increases structural
insecurity.
Because money is created each time a person contributes
to the chosen goal (e.g. becoming a caring, learning, healthy or
“greener” community), CCs increase social wellbeing. Even age-
ing, lowly educated or migrant people can help seniors, teach ref-
ugees, support the young or contribute to a clean street. CCs are as
abundant as there are people with talents and time. They may be
designed with negative interest (demurrage) or a time limit so they
circulate faster and discourage accumulation. Some have inbuilt
redistributive mechanisms, by donating a percentage of all par-
ticipants’ credits to people (e.g., with poor health) unable to earn
points. CCs mobilize local resources in an inclusive way, nurture
cooperative values and connect people.
Extracting vs. sharing
Creating F-money demands competing in the real economy.
Its “growth” demands raising productivity and speeds up entropy
(diminishing the energy available for work). As natural resources
become less accessible, profits will be increasingly hard to make.
So F-money creates a drive for actors to treat social and ecological
damage as externalities (kept outside the company books). Firms
will prefer working in countries where they can produce at the
lowest cost. As long as fossil fuels are cheap (disregarding ecolog-
ical and social damage) it may seem rational to let a pot of yoghurt
go through production steps in six different countries. Even for the

6. 60 POLITIQUE INTERNATIONALE
consumer it may be smarter to buy this yoghurt rather than the one
from the local bio-farm. Yet, depletion and pollution reach a point
at which the costs of neglecting them annihilate the profits.
CCs promote economic transactions in short supply chains
and diminish ecological footprints. Citizens may be rewarded for
reducing or recycling waste, and allowed to buy (only) ecological
products with CCs. If people share tools and skills, this reduces
the need for new appliances, slowing down the entropy process.
A person who wants to put up a frame needs “a hole in the wall”,
not a drill. A LETS-member may come in and drill the hole in
return for other help. This “sharing economy” (a social innova-
tion) is very efficient in fulfilling needs while using few material
resources. But it will also make the sales of tools (such as drills)
and the profits of their producers plunge. Yet, to have your hole in
the wall, you still want those tools to be made. So this very “func-
tional” economic model cannot scale up unless other moneys and
business models are introduced.
Leverages and blockages
What is required for CCs to fully play their role in balanc-
ing the money system? What blockages need to be removed?
Firstly, it is unlikely traditional banks will let go of their power
and make room for niches. As companies that make money by
making money, this would mean cutting off the branch they’re
sitting on. Given their (fiat) monopoly they are more likely to pri-
vatise local moneys hoping to increase their profits. They may
sell their services to groups wanting to set up exchange systems,
or buy the ICT behind local moneys so as to patent it. Only ethi-
cal banks may have a drive to support money decentralisation,
but that will require them to change their business model (no
longer extracting profits but sharing resources) and champion a
decentralised monetary system rather than bank monopoly. Bank
monopoly keeps CCs from scaling up and increasing their ascend-
ency. Lack of means and relatively high transaction costs (due to
small scale) can exhaust them. As only F-money has government
fiat, CCs depend on voluntary work, gifts or subsidies and cannot
fully develop the potential of their model.
So the key to unlocking the potential of local money is gov-
ernance (or politics). Just as companies invest both in streamlined
(ascendant) production and in R&D (resilience) to anticipate mar-
ket changes, so political institutions could foster CCs as living

7. Anne Snick 61
labs for financial resilience and paths to “real” economic growth.
To achieve that, the strong institutionalisation of the F-model has
to be overcome. Most economists and politicians treat money as a
“given” rather than as a historical choice, and focus on the ques-
tion “how to be competitive given (extractive) money” rather than
“what kind of money is needed for the economic function”. A
crucial leverage would be to create new (transdisciplinary) institu-
tions where alternative models are tested, insights exchanged and
changes in legislation explored.
A second blockage is that taxes are made payable only in
F-money. This creates the misconception that CCs evade taxes
and undermine social services. In fact CCs are a different way to
secure social wellbeing. Welfare is needed to cure ills caused by
F-money; CCs can be used to prevent them. Preventive policies
are cheaper than curative ones. If healthy behaviour (e.g. travel by
bike) is valued with CCs that can be used to buy “healthy” goods
and services (e.g. sports club fees or discount on bikes), public
costs will drop and the health of public finances improve. The
smartest thing to do is to have taxes paid (partially) in CCs, oblig-
ing all citizens and companies to work towards the common goal.
This is not a total utopia: in the UK, Brixton and Bristol already
accept taxes in CCs.
A third factor is legislation. Often the F-regime fails to grasp
that CCs aren’t about making profits by eschewing laws. CCs may
be seen as forgery, black economy or illegal schemes rather than
as ways to prosperity. This forces CCs to work within narrow
margins. Legislators need to recognise the collaborative premises
of CCs. They should create appropriate conditions and legisla-
tion based on sensible “caveats”. In 2014 France and California
adopted legislation enabling the creation of local currencies.
So, is a different money system possible?
Is there enough political will and wisdom to avoid further
social, ecological and economic collapse, to increase resilience
and change the monetary system? Two current evolutions are
likely to push political decision-making in that direction.
Companies active in the “real” economy feel the damage
(entropy) caused by a growth-addicted extractive model and in
response develop the circular economy (CE) using green tech-
nology and renewable resources. Their aim shifts from “making
money” to “sustainable use of resources”, so the monetary system

8. 62 POLITIQUE INTERNATIONALE
will have to follow. If a CE-factory uses waste as a raw material
for production, the growth imperative of F-money requires an ever
increasing influx of waste, so the overall impact remains “extrac-
tive”. CE actors know that for the real economic aim, deliver-
ing a function (e.g. light) is more effective than selling products
(lamps). They recognise that the sharing economy is even better
at doing this, since it encourages citizens to share tools and offer
services with CCs as “abundant” means of trade. Interestingly,
the CE sector is asking politicians to create a level playing field
for them to be able to survive in a global market. We can expect
CE companies who understand this to build alliances (with citi-
zens, social-profit organisations, public services, researchers and
maybe ethical banks), demanding political decision-makers to
diversify the monetary system and make room for CCs. If the CE
is allowed (or required by taxation) to do business using CCs with
environmental (and social) aims, its objective would come closer
with a giant leap.
Another strong signal is that cities are taking the lead in creat-
ing vibrant and green environments; governance at the urban level
appears more resilient, because walls between policy departments
are less rigid (or ascendent), and services concerned with adjacent
domains (e.g. mobility, social inclusion, health and finance) can
more easily cooperate. Cities also have a more direct feeling for
the real prosperity of their inhabitants. Local politicians can more
easily sit around the table with citizens, social-profit organisations
and local businesses. The will and wisdom of cities to create local
exchange systems is growing fast. Since close to seventy percent
of the world population will soon be living in cities, this decen-
tralisation of political power seems impossible to turn back. No
doubt this will also affect the financial system. In 2014 the mayors
of Calgary and Ghent were ranked first and second in the “Top
10 Mayors of the World”; tellingly both cities have their local
money.
(1) See pp. 45-54.