We know about Open-Source Software but can we also talk about Open-Source Currencies. A report by International Herald Tribune's Carter Dougherty reminds us that we can.
Inspired by a long-dead German theoretician, Silvio Gesell, the currencies mine a hoary conflict in economics — usually pitting the mainstream against subversive outsiders — about whether paper money is a neutral medium of exchange whose purchasing power should be scrupulously guarded, or an instrument that could be manipulated to fulfill capitalism's untapped potential.
Dougherty notes that these currencies are encouraged to be used more quickly. For example, "in the case of the chiemgauer, the notes lose 2 percent of their value each quarter if people do not spend them in time."
Some 21 such currencies exist in Germany. Some 31 more are in preparation and "Gerhard Rösl, an economist with the University of Applied Sciences in Regensburg, has also located similar experiments in Denmark, Italy, Scotland, Spain and Italy."
The main effect of these local currencies is an increase in the "velocity of money" in the local economy where they are used. The automatic devaluation rate of the chiemgauer, apparently increases its circulation by a factor of 3 compared to central bank issues used in the same market. The factor will obviously depend on a number of macroeconomic variables.
Note:
By "Open-Source Currencies," I mean currencies that are not sourced from central banks. These are often sourced, openly, from private non-bank or non-profit institutions.
You may wonder about the words in the title of this blog entry. They all refer to currencies issued by non-bank institutions.
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