1356) Micro-Currencies: Santa Maria Jajalpa (Mexico) and Castellino del Biferno (Italy): Is this the new norm after the "Chinese Wuhan Virus" (also known as "Covid-19") pandemic?
Two small towns a world apart, one in Mexico and the other in Italy, are using locally created currencies to help their citizens affected by the Chinese Wuhan Virus (Covid-19) pandemic.
Santa Maria Jajalpa, Mexico:
They have their own design, the town emblem, consisting of examples of local agricultural products in the centre, flanked by a pair of jaguars and security codes. The micro-currency is backed by money that the municipality collects in the normal course of local administration. The jajalpesos are traded at par with the Mexican peso, although they are not backed by the Bank of Mexico and are not legal tender. They are only valid in the community at designated businesses.
About 200 families have accepted this mode of payment and have received on an average 100 jajalpesos so far. Recipients are chosen based on their level of vulnerability, whether they have been fired or have nowhere to work. Jajalpesos are used to buy vegetables, chicken or tortillas.
The accepting merchants exchange them for cash at a local bank. While this is a boost to the local economy, its impact is limited to funds available.
Since the programme is not part of the State or Federal government funds planning, it has a budget of about 50,000 pesos in total.
Castellino del Biferno, Italy:
In Italy, 150 miles Southeast of Rome, the small town of Castellino del Biferno, is printing its own Banknotes for its about 600 residents. The hilltop town is so tiny and remote that the impact of Covid-19 has been modest, but a local currency is something that the Mayor Enrico Fratangelo has been contemplating for several years.
The Banknote are called "Ducati", a reference to the popular gold coin, with each Banknote worth one Euro.
Based on need, they are given to residents who spend them in local shops for food and other necessities. Every two weeks, shops redeem the Ducati they have accumulated with the town council in exchange for Euros.
The Mayor got a grant of 6,500 Euros from the government to distribute food vouchers to the needy. The town council added its own funds and gave the local currency to over 200 families. Nearly 4,000 Ducati has already been spent.
The Banknotes are printed locally with designs that the mayor used enhance the town's sense of belonging. They show local symbols, like the swimming pool or a statue of Mary etc.
Are micro-currencies the new norm?
Micro-currencies are primarily introduced for the purpose of creating/boosting the base for a socially and environmentally friendly local economy.
The salient features of this "currency" are:
- to put the economy at the service of people, culture and the globe
- to encourage local trade and relocalisepart of the economy
- to develop social ties and solidarity
- value the local culture and heritage
- support local projects of common interests and
- reduce the environmental impacts of the economy.
The four objectives of the local currencies can be summarised as:
- to regain control of the local economy
- to make the economy more sustainable
- to rebalance and preserve the local identity and
- to serve as a social connection and provide equity in the economy.
The use of a local currency is aimed as an insurance that the money spent will lead to the opening of new local markets. Money will not be able to leave the city/town/village and disappear in tax havens or be used to pay non-local companies.
This move is not targeted as a "Return to the Middle Ages", when cities issued their own money.
Instead local currencies will have a "Reserve Fund" (RF) of 100% of the currency in circulation, where for each one unit of local currency created, one Rupee (in case of India) must be placed in a Fund, guaranteed by a banking institution.
Are micro-currencies the new norm?
Micro-currencies are primarily introduced for the purpose of creating/boosting the base for a socially and environmentally friendly local economy.
The salient features of this "currency" are:
- to put the economy at the service of people, culture and the globe
- to encourage local trade and relocalisepart of the economy
- to develop social ties and solidarity
- value the local culture and heritage
- support local projects of common interests and
- reduce the environmental impacts of the economy.
The four objectives of the local currencies can be summarised as:
- to regain control of the local economy
- to make the economy more sustainable
- to rebalance and preserve the local identity and
- to serve as a social connection and provide equity in the economy.
The use of a local currency is aimed as an insurance that the money spent will lead to the opening of new local markets. Money will not be able to leave the city/town/village and disappear in tax havens or be used to pay non-local companies.
This move is not targeted as a "Return to the Middle Ages", when cities issued their own money.
Instead local currencies will have a "Reserve Fund" (RF) of 100% of the currency in circulation, where for each one unit of local currency created, one Rupee (in case of India) must be placed in a Fund, guaranteed by a banking institution.
The basic concept is "Think Global, Act Local".
Presently there are at least 44 local currencies circulating in France including the "Euscko" (in the Basque Region), including in Paris and in London, the Brixton Pound (micro-currency) circulates:
A link to my post on the Euscko is given at the following thread:
The Micro-Currency called - "EUSCKO", France circulates in the french Basque Country and is the largest such currency in circulation today, in the world, fully backed by the Euro; ii) It is one of 44 such micro-currencies circulating in French cities; iii) Paris is on the verge of introducing a micro-currency
Presently there are at least 44 local currencies circulating in France including the "Euscko" (in the Basque Region), including in Paris and in London, the Brixton Pound (micro-currency) circulates:
A link to my post on the Euscko is given at the following thread:
The Micro-Currency called - "EUSCKO", France circulates in the french Basque Country and is the largest such currency in circulation today, in the world, fully backed by the Euro; ii) It is one of 44 such micro-currencies circulating in French cities; iii) Paris is on the verge of introducing a micro-currency
A link to my post on the Brixton Pound circulating locally in London is given at the following thread:
Santosh Khanna has commented:
ReplyDelete"Excellent & Informative Post".
Thank you so much, Khanna sahab.
DeleteSatyajit Pratap has commented:
ReplyDelete"Very interesting Rajeev... But how is the size of money in circulation decided, since money is under strict control, how do the market prices move in local cities, and what happens when the goods are moved intercity ..AND how is the competition n quality maintained."
The money in circulation is what the local bodies - municipalities, Mayor, User bodies decide. It has to be fully backed by a bank guarantee and is 100% funded in the circulating currency as the micro-currency is only a token currency & not legal tender.. Market prices will depend on the local market forces like for example vegetables prices vary in various towns. There will be no inter-city movement of goods, as all villages, towns, cities will strive to become self-sufficient. If one does have to travel outside, then one uses regular currency. If need be, the micro currency which is at par with the regular country currency can be exchanged through the authorised bank. There is a regular review by the implementation committee. Any complaints regarding quality of products will lead to expulsion of the defaulting unit. In any case, to begin with, only a few outlets begin to accept micro-currency after proper vetting by the Implementation committee, and slowly the numbers build up.
DeleteSatyajit Pratap has further commented:
Delete"Why don't you tweet this to our PM.... Hojaye…"
Thanks, Satyajit. I have tweeted this post link to the PM and FM in the morning.. Let us see if anything develops.
DeleteMukesh Agarwal has commented:
ReplyDelete"Great. Covid is bringing out best out of adversity."
It sure is, Thanks, Mukesh.
DeleteAshok Borate has commented:
ReplyDelete"Very nice Rajeev ji."
Thank you, Ashokji.
Delete