Community Currency Systems: A Co-operative Option for the Developing World ?

The aim of this paper is to demonstrate the potential of Community Currency Systems (CCS) in strengthening the local economy in developing countries. A CCS is a agreement among members of a community (individuals and/or enterprises) to accept a certain exchange medium, which is not the national currency. The community currency is only valid within the community, thus stimulating local demand and eliminating the leakage effect commonly caused by imports. Moreover, the quantity of money in circulation is determined by the community itself, which reduces the problem of money scarcity.

Chapter 1 will explain the malfunctioning of the current monetary system, indicating the need for an alternative complementary exchange system that can compensate partially the shortcomings of the current system. In chapter 2 will start with a summary of the general principles and history of community currencies, demonstrating the capability of ordinary people to issue money. Furthermore, an analysis will be made of the different types of CCS that can be distinguished.

In chapter 3, several common arguments against community currencies will be studied more closely. Also the relevance of these arguments for developing countries will be discussed. CCS experiences in developing countries are still very rare. In order to give an impression of the functioning of CCS in developing countries, chapter 4 describes experiences in Argentina, Mexico,Senegal and Ecuador. In chapter 5 the conditions for a successful introduction of local currencies will be determined on the basis of the few existing scientific studies on community currency experiences. These conditions will be compared with the situation prevailing in developing countries, thus giving an insight into the potential of CCS as a poverty alleviation strategy.

In chapter 6 some practical issues concerning the management of CCS will be raised and attention will be given to the question how these issues can be solved in a Third World context. Chapter 7 will take a look into the question if CCS are in fact co-operatives and to which extent co-operatives can play a role in introducing and promoting CCS. Chapter 8 gives an overview of the possibility of CCS to contribute to the sustainability and acceptability of existing programmes and projects, such as micro credit, training and environmental programmes. Finally, chapter 9 will elaborate on the potential role of the ILO in the further development and the promotion of the CCS concept.

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