Ralf Becker
THE EURO'S SMALL SIBLINGS
In Germany and Austria a rising number of complementary regional
currencies supplement the legal tender
from Zeitschrift für Sozialökonomie
ZfSÖ 43. Jahrgang, 149. Folge, June 2006,
ISSN 0721-0752
translated by Henning Osmers
edited by Nadia Mc Laren
August 17th
, 2006
Major lines of development
Since the introduction of the Euro on 1st January 2002, seventeen
regions in Germany and Austria have introduced an additional currency
intended to supplement the Euro in its respective area of circulation.
Among them, and best known so far is the ,,Chiemgauer", a
complementary currency used in a small region in the southwest of
Germany. It was first issued in 2003, exactly one year after the Euro's
replacement of the Deutsche Mark, and the media quickly took notice:
the almost exclusively positive coverage of leading TV and radio stations
as well as most major German newspapers soon communicated the
currency experiment to other parts of the country.
Now, three and a half years after it started, more than 430 small and
medium-sized companies have accepted the Chiemgauer as a means of
payment. In 2005 more than 1,200 people used it as additional medium
of exchange. They generated a total annual turnover in Chiemgauer of
approximately 720,000 Euro for the participating companies. The rapid
rate of its circulation is seen as a major advantage in comparison to the
Euro; each unit of the common currency, the Euro, is spent around 3,5
times a year on average, whereas a Chiemgauer note is used for
transactions more than 15 times during the same period.
The public attention paid to the Chiemgauer and its high rate of uptake
has quickly inspired the formation of a growing number of comparable
initiatives in other regions of Germany and Austria, which have
introduced similar exchange media or are planning to do so. In August
2003, the ,,Regionetzwerk" was established as a countrywide network of
complementary currency initiatives and recently transformed into a
formally organised association, the Regiogeld-Verband, to support the
introduction and to compare the experiences with these regional
currencies.
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Even before the Chiemgauer, in September 2001, another
complementary currency was launched in the city of Bremen in northern
Germany. Especially designed to support regional organic farming, the
,,Roland" has lower growth rates and fewer users than the Chiemgauer.
Nevertheless its initiators have developed a sophisticated system of
savings and loan accounts for the users of the Roland and have been
able to support a number of farmers in financing their investments.
In January 2004, the ,,KannWas" was introduced in the German state of
Schleswig-Holstein as the first complementary currency designed for a
statewide use. Then, two month later the ,,Justus" became the first
complementary medium of exchange not based on and backed by the
Euro.
A new wave of publicity was created by the introduction of the ,,Berliner"
in Berlin in February 2005. It is printed by the Bundesdruckerei the same
printing firm that is responsible for printing Euro notes on behalf of the
Deutsche Bundesbank. Prominent figures like Wolfgang Thierse, at that
time president of the Bundestag (the Lower House of German
Parliament), attended the kick-off event. The news agency dpa even
reported, erroneously that the Berliner was meant to replace the Euro in
the German capital, though it soon corrected this canard.
In Austria, the Arbeiterkammer, a government body, is supporting the
complementary currency ,,Waldviertler" by providing the money for the
employment of seven people to support the Waldviertler system.
Further complementary currencies like the ,,Volmetaler" in the German
city of Hagen, the ,,Bürgerblüte" in Kassel and the ,,Havelblüte" in
Potsdam have recently been launched. Several other complementary
currencies exist or are planned in the nearer future.
The "Berchtesgardener Land" as model region
The Regiogeld e.V., the association of complementary currency issuers
and initiatives that emanated from the Regionetzwerk, in February 2006
granted the Berchtesgardener Land, where the ,,Sterntaler" is circulating,
extra support and the status of ,,special model region". The Sterntaler is a
regional currency circulating on both sides of the German-Austrian
border. The following goals of the initiative lead to the granting of this
special status:
- To experiment with options for the systematic combination of
money- and time-based complementary means of payment
- To achieve a compatibility with the Chiemgauer, which does partly
circulate in the same area
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- To make the Sterntaler a well working cross-border complementary
currency and
- To make it a self-financing system.
The hope is, that the Sterntaler-project--which is considered to be one of
the most successful and best-managed systems for complementary
currencies in Germany and Austria--will generate fundamental insights
for the advancement of other regional currencies as well. It is highly
regarded by most participating businesses, and so the chances of
success and valuable results seem to be quite good.
The creation of current account systems for complementary
currencies
Like the Roland in Bremen, several other initiatives are emphasising
current account systems for their currencies: for example the
,,Urstromtaler" system in the state of Sachsen-Anhalt and the
Chiemgauer. In the Chiemgauer-region, facilities for withdrawing the
local currency from some Automatic Teller Machines (ATMs) have been
set up--a first step in making the voucher system a fully functional cardbased
and electronically accessible payment system. Together with GLS
Bank, the Chiemgauer association has recently completed the final steps
of setting up a system of current accounts in the town of Wasserburg on
the river Inn; after its trial run, this will hopefully be transferable to other
regions.
A local savings bank in Leipzig has also developed (but not yet set up) a
purely electronic current account system similar to the one used by the
WIR Bank in Switzerland.
A different approach is followed by initiatives in the cities of Karlsruhe
and Stuttgart. Here the goal is to develop a system of accounts that does
not require a banking licence.
Elsewhere, based on software for Local Exchange Trading Systems
(LETS) and with the goal to create an interface with standard banking
software, a diverse group is informally working to develop a program
capable of handling large scale and numerous electronic transactions.
A student's company turns into a co-operative
The enormous speed with which the regional currency movement has
developed in Germany can be exemplified best by again looking at the
Chiemgauer. This currency was designed and brought into circulation by
an experimental company set up within a school, primarily as a learning
tool to give pupils the opportunity to develop a "hands-on" understanding
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of fundamental economic and business processes. They soon had to
establish a registered association in order to meet the challenges
resulting from the growth of their currency system. Meanwhile the system
has outgrown the capabilities of the association and will be transformed
into a co-operative by 2007. Completion of this transformation awaits a
change in the co-operative law attached to the passage of an EU
directive scheduled for autumn 2006. This directive will make it possible
to set up co-operatives with a social or cultural instead of a purely
economic purpose.
The reason for choosing the organisational form of a co-operative for
managing the Chiemgauer lies in a close tie between the original idea
that guided the establishment of co-operatives in the 19th
century and the
aspirations of regional currency systems today. Herrmann SchultzeDelitzsch
(1808-1883) and Friedrich Wilhelm Raiffeisen (1818-1888)
founded the first co-operative banks in Germany. They intended to
create a self-help system for the regional economy in and around their
respective hometowns--an intention pursued again today by many
complementary currency initiatives. It is interesting to notice that the
hometowns of both Mr. Delitzsch and Mr. Raiffeisen are now also home
to initiatives to establish regional currencies. In Delitzsch, for example,
the savings bank uses the successful Swiss WIR system, a co-operative
existing since 1934, as its model for a regional currency system.
Differences between Eastern and Western Germany
Initiatives in Eastern Germany are facing special challenges in trying to
set up regional currencies. This has lead them to align with each other in
a network called RIO (Regio Initiativen Ost ­ Eastern Regio Initiatives).
The economic weakness of many regions in the east and the financially
difficult situation of companies and citizens, both resulting from mistakes
made during the process of transformation of the former socialist
planned economy into a market economy, have left these regions with
too few intra-regional business relationships to support small regional
currency systems. In addition the financially strained situation of many
businesses and people alike does not allow them to change scarce
Euros into a regional currency, therefore making it very difficult or even
impossible to adopt the successful Chiemgauer system--a Euro-backed
system--for these regions.
Realising this, the initiators of the Urstromtaler-currency (circulating in
the state of Sachsen-Anhalt) have abandoned the idea of a Euro
backing. Usually it is not possible to acquire Urstromtaler by exchanging
Euros for it. Instead the participating companies simply declare their
willingness to accept Urstromtaler as a means of payment for their goods
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and services, although they may set thresholds related to their turnover
or accept a certain proportion of the full price. Citizens can join the
Urstromtaler system by offering services for Urstromtaler or by accepting
a small proportion of their wages in this currency. Members of this
system get an Urtstromtaler account in which they can accumulate their
regional currency and which they can also overdraw to a certain degree.
To make payments, people can withdraw money from their respective
account or make a direct transfer to the account of another member.
A similar currency model is pursued in the city of Potsdam, where the
Havelblüte recently began to circulate. Here the backbone of the
currency is again a promise of participating companies to provide goods
and services for the regional currency. As a special feature, the amount
of Havelblüten a company is allowed to bring into circulation does not
only depend on the scale on which it is willing to accept this currency as
a means of payment, but also depends on the number of its employees.
The future will show if hopes are justified--whether this design feature
will result in the creation of jobs in the long run.
In order to meet the challenges of the relatively low degree of intraregional
economic activity and business relations in most Eastern
German regions, the RIO-initiatives now consider setting up a clearing
system capable of connecting different regional currencies. The goal is to
strengthen the intra-regional circulation of goods and services. A similar
system by the name of WÄRA existed in Germany between 1926 and
1931 and serves as an example for today's considerations.
Special challenges for the regional currency movement
So far the regional currency projects in Germany have started as grassroot
initiatives, usually following a not-for-profit path and giving special
weight to social and ecological values. As their umbrella association, the
Regiogeld e.V. has developed a special organisational culture and has
defined a set of norms and criteria in order to maintain these values and
set a standard of quality.
An upcoming challenge lies in the intention of a profit-orientated local
savings bank (Sparkasse) in Leipzig to introduce a professionally
managed and commercially focused regional currency. Currently, the
profit bias of this bank is contradicts the values and criteria of the
Regiogeld e.V. As a result, an integration of the bank and its currency
into the umbrella association is currently not possible. If the bank does
decide in favour of starting its currency, the Regiogeld e.V. will have to
discuss how to deal with that situation, especially as the financial power,
the professional experience and the technical infrastructure of the bank
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would probably make its complementary currency the largest and most
significant in Germany.
Tensions may also arise in Austria where the Arbeiterkammer's financial
commitment towards the Waldviertler has resulted in the intention to
abandon the demurrage. This feature specially aims at producing certain
social benefits and is a critical element from the point of view of the
citizens and entrepreneurs who have started the system. While the
manpower and financial assistance provided by the central government
body significantly widens the scope for further developing and promoting
the Waldviertler, the downside of this development lies in a risk of losing
its social and ecological focus.
The fundamental question the Regiogeld e.V. is increasingly confronted
with is how to set up commercially self-financing currencies without
abandoning its foundation values.
With respect to using demurrage as a circulation incentive, after some
deliberations the Regiogeld e.V. has decided not to insist on this feature
for currencies issued by its member initiatives. However, in order to
ensure the economic neutrality of these currencies, member initiatives
are required to take measures that prevent the charge of a liquidity
premium (interest) in association with a regional currency.
Competition and cooperation with card-based customer loyalty
systems
In recent years numerous institutions have introduced card-based
customer loyalty systems, which in many instances have some
commonalities with complementary currencies but rarely generate the
same benefits for society in total. In Germany's non-urban regions,
publishers of local and regional newspapers have been at the forefront of
this development. As such, in some cases they pose a competitive threat
for the establishment of regional currencies. First of all, businesses
participating in a loyalty system often show an unwillingness to join yet
another system, such as a complementary currency system. Secondly,
the operator of a loyalty system often has an influential position within
the region and can significantly increase the difficulties for setting up
another currency if he perceives it as unwelcome competition. This has
already led to the abandonment of some of the regional currency
projects in Germany.
A solution for this problem may lie in merging loyalty-card-systems and
complementary currencies on a regional level in order to generate
synergies and combine the strengths of each of these approaches.
Suggestions of how this can be done have been developed for the
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administrative districts Osnabrück and Emsland, but could also be
deployed elsewhere. People are also working on options for combining
these systems in other regions. Nonetheless, to date it remains unclear
whether these efforts will be successful. The interests of loyalty-cardoperators
and regional-currency-advocates often diverge too much to
bring them together easily.
Scientific monitoring of regional currency projects
On the subject of research, various graduate diploma theses have
already been finished and PhD research projects are in process of
completion. Several of these studies have been published on the Regiowebsite.
Their aim is to make the field of complementary currencies
more transparent and to investigate whether these new financial designs
are able to fulfil their goals. To enable cooperation and coordination in
this field, many researchers have joined a network called "MoNa"
("Netzwerk für Monetäre Nachhaltigkeit": network for research into
monetary sustainability). This network regards itself as a platform for
independent researchers and is not officially tied to the Regiogeld e.V.
However, its members do welcome the Regiogeld e.V. as an important
and necessary organisation and many have explicitly declared that they
want to support the Regiogeld e.V. with their work.
Besides MoNa, a network called "Fachkompetenznetzwerk" (network of
professional competence), abbreviated as FKN, has been established as
advisory body for the Regiogeld e.V. Its members are experts and
scientists with various professional and technical backgrounds. Members
of the FKN are working on various projects and publications, among
them the publication of a book bringing together the research results of
different professionals.
A special study group of the FKN tries to examine the economic potential
and the prospects of success of different models of complementary
currencies. It also tries to answer the question of how best to deal with
successful yet purely commercial complementary currencies, in case
such models should emerge. How can the values and social goals
currently associated with complementary currencies be preserved once
these currencies gain ground and commercial banks start breaking into
this domain?
Another focus of FKN members is on the relationship and mutual
influence of regional complementary currencies and other
complementary systems such as Miles-and-More. Besides regional
currency systems, various other systems have the capacity to partly
replace or supplement the use of money. A possible option to deal with
this variety of systems is the foundation of an association or an institute
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that will deal with, and can serve as an umbrella organisation for, all
kinds of complementary currencies and money substitutes. Such an
institution could serve as organisational interface and communication
platform between issuers of various kinds of complementary means of
payment, universities and other research institutions, government and
administrative bodies, commercial banks and the Bundesbank
respectively European Central Bank. Concrete actions along these lines
are still pending, yet the group supporting this idea in complete
accordance with the research findings of a recently published report to
the Club-of-Rome entitled "Money and Sustainability: The Missing Link".
General Future Perspectives
An important tendency within the regional currency movement is an
increasing degree of networking and cooperation, as most activists
understand that validating the assumptions that are fundamental for this
movement is an enormous task, which nobody can carry alone. This
trend will likely continue in coming years and affect evolution at both
national and international levels. A possible future development within
this context is the foundation of a European umbrella association and
national associations.
An important opportunity, which might have relevance even beyond
German borders, could arise from a public hearing in the Bundestag, the
Lower House of German Parliament. Ulrich Kasparick, member of the
German Parliament and former secretary of state in the federal ministry
for education and research, has offered to support arranging such a
hearing. In order to generate parliamentary backing for the
complementary currency approach, the Regiogeld e.V. has begun to
compile a list of members of the parliament who sympathise or are likely
to sympathise with the idea of such supllmentary means of exchange.
The hope is to win support of members of all parliamentary parties
before the hearing takes place in order to ensure a successful outcome.
A future problem for complementary paper currencies might arise from a
classification of them as money. As the printing of money is an exclusive
right of the Bundesbank, it cannot be excluded with absolute certainty
that the issuance of complementary regional paper currencies might one
day be assessed as illegal. Gerhard Rösl, research associate of the
Bundesbank has already put existing complementary currencies in the
category of money in an article published in Wirtschaftsdienst, one of
Germany's leading economic periodicals. However, he also states that
these currencies do not currently amount to more than 0.00002% of the
money aggregate M1, which makes them irrelevant from the point of
view of the Bundesbank. As long as the Bundesbank does not consider
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these media of exchange a threat to the Euro stability, chances are that it
will likely refrain from interventions and instead be satisfied with taking
the role of a careful observer.
However, even in the event the Bundesbank changes its current attitude
and makes a move to stop the issuance of complementary paper
currencies, this would not necessarily mean that it will become
completely impossible to issue such currencies. As the Bundesbank
especially focuses Euro-backed systems, the bringing into circulation of
money-like vouchers, backed by different means than the official
currency, could remain a valid option even after such an intervention.
The Regiogeld e.V., and the Fachkompetenznetzwerk (FKN) as its
advisory board, hope to be able to prevent interventions of the
Bundesbank or the European Central Bank with pre-emptive justification
that complementary means of payment do not pose a risk to the stability
of the Euro, even if they should reach a size which makes them
economically relevant on a broader level. Members of the FKN are
working on scientific papers underpinning this argument. The 2006 report
to the Club of Rome has already started paving the way by suggesting
that regional currencies may play an important role in supporting
sustainable development. Besides this research and advocacy work, the
Regiogeld e.V. tries to win political support for complementary means of
payment, recognising that political parties and members of parliament
usually have a broader perspective than the Bundesbank and might
acknowledge regional complementary currencies as an innovative
instrument of sustainability policy.
Literature:
Brunnhuber, Stephan and Harald Klimenta. Wie wir wirtschaften werden: Szenarien
und Gestaltungsmöglichkeiten zukunftsfähiger Finanzmärkte (How we will
manage our economy: Scenarios and design possibilities for financial markets
with a future). Frankfurt: Überreuter Verlag, 2003.
Creutz, Helmut. Das Geldsyndrom (The Money Syndrome). Munich:
Wirtschaftsverlag Langen Müller/Herbig, 1993.
Kennedy, Margrit. Interest- and Inflation-Free Money. Okemos, Michigan: Seva
International, 1995.
Kennedy, Margrit and Bernard Lietaer. Regionalwährungen: Ein neuer Weg zu
nachhaltigem Wohlstand (Regional currencies: A new path to sustainable
prosperity). Munich: Riemann Verlag, 2004.
Lietaer, Bernard A. Of Human Wealth: New Money for a New World Boulder, CO:
Citerra Press, Autumn 2006.
Musil, Robert. Geld, Raum und Nachhaltigkeit (Money, space and sustainability).
Lutjenburg: Verlag für Sozialökonomie, 2004.
Websites
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WIR-Bank:
www.wirbank.ch
Regional currencies in Germany:
www.regiogeld.de
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