For the layman, getting past our ‘one currency fits all’ model can be a challenge. Money is so firmly embedded in our daily lives that we give as much thought to money-itself (as opposed to the lack of it) as we do to the air that we breathe.
Pointing out that there are other well established currencies (like Airmiles, Tesco points, timebank hours, Brixton pound) helps a bit, but these operate in niches. The Swiss WIR experience is not widely known or talked about. Even the terminology is instructive – there are ‘alternative’ currencies (read this as ‘wacky’) and complementary currencies (read as ‘non-threatening: we’ll just work away; you wont even notice we’re here’).
For the sort of serious currency suggestions being explored by Feasta and others, I prefer the term Designer Currencies. They are ‘designed’ for a specific purpose.
Here we are up against the idea that money is ‘value-free’ – that it is a neutral entity that just facilitates exchange. But the current debt crisis gives a lie to this. National (and international) fiat currencies are closely linked to debt because money is created in the form of debt. That debt requires interest to be paid, and the exponential growth of this compounded interest means there must be growth in economies or it cannot be repaid.
Early sessions at the Feasta Autumn Conference will explore Ireland’s strategies for dealing with the current convergent crises, but the Friday afternoon session will concentrate on the potential for a Parallel Punt – a separate national Irish currency working alongside the euro.
The existing national strategy has been described (perhaps unkindly) as ‘relying on the kindness of strangers’. The political attraction of the Parallel Punt addresses this perception – of a national government sitting on its hands waiting like children for arcane Eurozone conversations in darkened rooms to produce economic rabbits out of the hat. It would be taking action, but action to do what?
The principle objective of such a currency is to increase national liquidity in the teeth of the austerity measures that are underway and which are set to continue. Euros in Irish accounts would be converted to Punts on a 1:1 basis, as would existing loans from Irish institutions. The government would ask the Central Bank to manage the exchange ratio within set bounds. The Punt would be the accepted currency for intra-Ireland exchange. Direct taxes however would still be payable in euros, and the euro would still be accepted for international exchange. The government would then have some choices – for example it could issue Punts as a non-debt currency by spending them into circulation on strategic projects (e.g. infrastructure, green technology) or it could embark on a ‘traditional’ quantitative easing programme in Punts via the banks.
The approach appears to offer the national government a way of taking some independent proactive responsibility for its own economic future without showing a loss of solidarity with its Eurozone partners. A Designer Currency for National Liquidity. But maybe that’s too simplistic. Friday’s session should shed some light.
Senior Policy Advisor, Feasta
Managing Partner, Feasta Sustainability Consulting LLP
00 44 1747 821480 (UK)
00 44 7768 291125 (mobile)
00 353 1 657 1909 (Ireland)