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Lost in translation

I’ll post lots of serious stuff this week about payments, as I’m chairing a conference about payments processing developments all week.  The conference will cover everything from mobile and contactless through SEPA and SWIFT, and many believe that payments is an area that has a positive vibe in banking as ‘Transaction Services’ – the payments processing part of a bank – is the one, profitable and reliable business for most large banks. 

Mmmm … just a thought but could even this be threatened by the loss of confidence people feel with banks? 

After quantitative easing, which the media translate into ‘printing money’, does this mean that people might even question the meaning of money itself?

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Some people might but what’s the alternative?

Probably the same one that came up during the Great Depression of 1929.

Back then many people felt lost and money became meaningless. The runaway inflation in Germany led to the rise of Hitler, and millions of people were unemployed, homeless and hungry.  The result was the rise of complementary currencies, also known as community currencies.

These currencies are an alternative to money that can be transacted and traded locally to encourage local transactions using stable local trusted mechanisms, administered by the local community.

Community currencies can be ‘earned’ by doing work for the community and in the locality.  Fixing gates, ploughing fields, painting fences … you name it.  If it’s good for the community, you get some community currency.

All shops, merchants, farms and dealers will accept this currency, often in preference to real money, especially if ‘real’ money becomes uselss due to hyperinflation (take note Zimbabwe).

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These currencies arose en masse in the 1930’s, to get around the issues of the Depression, the loss of faith in the banking and political system, and the challenge of work.

Sounds familiar?

Funnily enough, one of those currencies is still around: the Wir.  Meaning ‘we’ in German – we are the community – the Wir Bank still operates in Switzerland. Rising from just 16 constituents in 1934, the Wir now supports over 62,000 small to medium businesses transacting around CHF 1.65 billion (US$1.4 billion) a year.

Anyways, I’ve mentioned such currencies before, but now note that these are rising worldwide and fast, from the Liberty Dollar (USA) to the Lewes Pound (UK) to the Boon Kud Chum (Thailand) to the Tianguis Tlaloc (Mexico) … in fact, you can pretty much find a LETS (Local Exchange Trading System), Regio (Regional currency) or Time-based currency system anywhere today.

I’m sure it’s a subject I’ll come back to and just lay if down as a marker for note right now, but would be interested if anyone has experience of such currencies in action.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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