Complementary Currencies for Humanitarian Aid

The humanitarian sector has gone through a major shift toward injection of cash into vulnerable communities as its core modality. On this trajectory toward direct currency injection, something new has happened: namely the empowerment of communities to create their own local currencies, a tool known as Complementary Currency systems. This study mobilizes the concepts of endogenous regional development, import substitution and local market linkages as elaborated by Albert Hirschman and Jane Jacobs, to analyze the impact of a group of Complementary Currencies instituted by Grassroots Economics Foundation and the Red Cross in Kenya. The paper discusses humanitarian Cash and Voucher Assistance programs and compares them to a Complementary Currency system using Grassroots Economics as a case study. Transaction histories recorded on a blockchain and network visualizations show the ability of these Complementary Currencies to create diverse production capacity, dense local supply chains, and data for measuring the impact of humanitarian currency transfers. Since Complementary Currency systems prioritize both cooperation and localization, the paper argues that Complementary Currencies should become one of the tools in the Cash and Voucher Assistance toolbox.

Mathematical Foundations for Balancing the Payment System in the Trade Credit Market

The increasingly complex economic and financial environment in which we live makes the management of liquidity in payment systems and the economy in general a persistent challenge. New technologies make it possible to address this challenge through alternative solutions that complement and strengthen existing payment systems. For example, interbank balancing and clearing methods (such as real-time gross settlement) can also be applied to private payments, complementary currencies, and trade credit clearing to provide better liquidity and risk management. The paper defines the concept of a balanced payment system mathematically and demonstrates the effects of balancing on a few small examples. It then derives the construction of a balanced payment subsystem that can be settled in full and therefore that can be removed in toto to achieve debt reduction and payment gridlock resolution. Using well-known results from graph theory, the main output of the paper is the proof—for the general formulation of a payment system with an arbitrary number of liquidity sources—that the amount of liquidity saved is maximum, along with a detailed discussion of the practical steps that a lending institution can take to provide different levels of service subject to the constraints of available liquidity and its own cap on total overdraft exposure. From an applied mathematics point of view, the original contribution of the paper is two-fold: (1) the introduction of a liquidity node with a store of value function in obligation-clearing; and (2) the demonstration that the case with one or more liquidity sources can be solved with the same mathematical machinery that is used for obligation-clearing without liquidity. The clearing and balancing methods presented are based on the experience of a specific application (Tetris Core Technologies), whose wider adoption in the trade credit market could contribute to the financial stability of the whole economy and a better management of liquidity and risk overall.

The Complementary Currency Zielony in Poland and Its Importance for the Development of Local Economy Entities during the COVID-19 Pandemic Lockdown

The article aims to present how the COVID-19 pandemic lockdown affects the functioning and circulation of complementary currencies in entities that have joined the complementary currency system with a special focus on the complementary currency Zielony (PLZ) in Poland. The main research problem of the paper is formulated in the form of a question concerning the impact of the lockdown during the COVID-19 pandemic on the use of the Zielony in Poland in commercial transactions by entities belonging to the local currency system. In order to achieve the objective and solve the main problem, the article uses such research methods as: the method of critical analysis of literature, historical method, statistical method, comparative method, observational method, free expert interview, as well as analysis and synthesis, deduction and induction and abstraction. We conducted a critical analysis of the literature and analysis of statistical data of the complementary currency Zielony in Poland in the period from March 2015 to June 2021, and the results of the expert interview showed that this currency is not a tool to support the functioning of local economy entities during non-financial crises, such as COVID-19 pandemic. This is influenced by, among other things, full or partial lockdown and other restrictions on the functioning of commercial entities during a pandemic. The consequences of such solutions include the weakening of economic activity and a decrease in the value of turnover of entities operating in various sectors of the local economy, especially entities of a service nature, which constitute about 80% of the structure of the Zielony complementary currency system in Poland. The main conclusion resulting from the conducted research is as follows: the complementary currency Zielony in Poland can influence the creation of local entrepreneurship and sustainable development and support the activities of the sector of small- and medium-sized enterprises, but these benefits are possible to achieve primarily in conditions of stable and undisturbed functioning of the economy. The realization of the payment function of the complementary currency, the Zielony, and its use in payments of entities belonging to those industries covered by lockdown and other administrative restrictions is impossible (or insignificant) at this time due to the absence (or hindered) of its circulation in the economy. The research results and conclusions presented in the article meet the assumptions of the application objective and can provide the entities of the micro-, small- and medium-sized enterprise sector with knowledge about the dependencies resulting from the use of the complementary currency in the lockdown period by the entities that implement the assumptions of the system of complementary currencies.

The role of location in the functioning of a local currency: La Gonette case study

The beginning of the 21st century was a proliferation of complementary currencies worldwide. Among them, a number of newly created local currencies were notable. France proved to be especially fertile in this regard from the early 2010s. La Gonette, operating in the metropolitan area of Lyon, is one of the biggest French local complementary currencies in terms of its users, providers (business partners), and money supply. For every scheme, the most important issue, which is also a challenge, is to provide enough spending options to be attractive for users, while also retaining their particular sociocultural identity. Besides a variety of spending options, their location features are also important in regards to future development, so decision-makers of a scheme can diversify the business expansion strategy accordingly in order to better achieve the desired socio-economic goals. Using la Gonette as a case study, the research objective of this paper is to uncover the implications of the providers’ location on the functioning of the scheme. To address this objective, I applied statistical tests for correspondence on the providers’ categorical and locational breakdowns. The results have shown heterogeneity in the spatial distribution of the types of providers in accordance with broader location characteristics, a fact which supports the need for territorial diversification of future development concepts.

Inconsistent Definitions of Money and Currency in Financial Legislation as a Threat to Innovation and Sustainability

External shocks, like the climate catastrophe or the COVID-19 pandemic, as well as intrinsic fallacies like the securitization of bad debt leading up to the financial crisis in 2008, point to the need for updating our monetary and financial systems. Ensuring their adequacy and resilience is an important factor for sustainability at large. This paper examines the definitions of “money” and “currency” in financial legislation as a foundational factor in achieving systemic resilience by allowing or hampering monetary innovation and diversity. From the unencumbered vantage point that the practice of complementary currencies offers, definitions of the terms “money” and “currency” are here traced through the laws and regulations of the United States of America, from the beginnings of modern banking to the recent rulings on crypto-currencies. They are both found to be used and defined in contradictory ways that are inapt even in regard to conventional modern banking practices, let alone when applied to novelty in payment, issuance and valuation. Consequently, this paper argues that basic legal definitions need to be reviewed and consolidated to enable the innovation and diversification in monetary systems needed for long term macro-economic stability. With this in mind, a terminology that is consistent with monetary practice—current, past and future—as well as the procedural difficulties of reforming laws and regulations is proposed.

The Role of Complementary Monetary System as an Instrument to Innovate the Local Financial System

For decades, complementary monetary systems (CMSs) and open innovation in the local area have coexisted alongside official currencies. Today, when it is most necessary to innovate and act locally to solve global problems, it is appropriate to increase the usefulness of financial instruments, such as social and complementary currencies, which can contribute to building more sustainable and resilient cities and thus achieve the Sustainable Development Goals (SDGs). This research, through a synthetic analysis, contributes to the scientific debate on the usefulness of the CMSs. It examines the practical way in which these instruments can be used to innovate in local financial systems as elements capable of promoting and dynamizing the economic and social relations of a locality.

Digital complementary currencies and public policies during the COVID-19 pandemic

Resumo Programas de renda básica têm sido utilizados em todo o mundo como uma ferramenta para mitigar os efeitos adversos da crise da COVID-19. No Brasil, a implementação de iniciativas federais de renda básica emergencial (RBE) enfrenta um duplo desafio: a logística de distribuição de dinheiro e os critérios de elegibilidade dos cidadãos. No entanto, iniciativas de moedas complementares existem há muitos anos no Brasil, estando associadas especialmente aos bancos comunitários, os quais operam no nível local e possuem conhecimento mais aprofundado sobre as necessidades dos moradores. Este artigo analisa o uso de moedas digitais complementares no enfrentamento de desafios de distribuição de renda. Apresentamos o caso da moeda complementar digital Mumbuca E-Dinheiro, adotada pelo município de Maricá (RJ). Discutimos como esta iniciativa permitiu a distribuição de renda de forma rápida e segura com o objetivo de mitigar os efeitos da pandemia da COVID-19 no Brasil. Sugerimos que, no momento atual, a RBE poderia ser paga através do E-dinheiro, começando pelos municípios nos quais ele já atua e depois se expandindo para os demais. A interoperabilidade com outros atores do ecossistema de pagamentos e articulações com governos locais são medidas adicionais para dar escala ao uso das moedas complementares digitais no combate à crise do coronavírus.

Complementary Currencies: An Analysis of the Creation Process Based on Sustainable Local Development Principles

Complementary currencies are a reality and are being applied both globally and locally. The aim of this article is to explain the viability of this type of currency and its application in local development, in this case, in a rural mountain municipality in the province of Almería (Spain) called Almócita. The Plus, Minus, Interesting (PMI); “Flying Balloon”; and Strength, Weakness, Opportunity (SWOT) analysis methodologies will be used to carry out the study. Finally, a ranking of success factors will be carried out with a brainstorming exercise. As to the results, there are, a priori, more advantages than disadvantages of implementing these currencies, but the local population has clarified that their main concern is depopulation along with a lack of varied work. As a counterpart to this and strengths or advantages, almost all the participants mention the support from the Almócita city council and the initiatives that are constantly being promoted.