There appear to be four main ‘flavours’ of motivations driving new currency innovation:
a) deprecatory: informed by a view that mainstream fiat money is toxic and a better form can be usefully invented
b) economic: driven by the desire to preference a given sub-economy
c) value-led: where specific social outcomes are sought through the device of a currency
d) commercial: currency invention with narrow commercial aims
The first three map (loosely admittedly) on to Kenichi Ohmae’s ‘strategic triangle’ of competitor, customer and corporation. The first identifies fiat currency as the competitor and sets out specifically to address perceived weaknesses and faults of fiat. The second defines a group of target customers/ users, usually but not always based on geography. The third seeks to build an institution founded on a specific value-set (think mission statement) – albeit that the imagined eventual institution may well be more co-operative and/or digital/ autonomous than standard corporation. (Examples: bitcoin, Brixton Pound, timebanks). Mixed motivations are of course possible.
This article is an attempt to drill down into these motivation flavours and see what insights we can extract. It is part of the Feasta Currency Group’s work programme on Intentional Currencies, and anticipates a diverse future monetary ecosystem where currencies are more under the control of their users. (Who knows? Taxes could be payable in a user’s currency of choice.) Thanks to Phoebe Bright and Ciaran Mulloy for the discussions that preceded this particular brain-dump.
The Deprecation of Fiat
Fiat money operates within and is notionally controlled by an individual state (the euro being the problematic exception). Its main success is that of total acceptance within the relevant nation state. But it is an invention of man, and the question is ‘can we do better?’. Dissatisfaction with fiat revolves around its private creation as credit by an oligopoly of banks; its subsequent rental (via interest) transferring wealth from the have-nots to the already-haves; its misallocation away from productive use to fuel the casino and asset bubbles; and its lack of democratic or strategic control.
Currency reformers are gaining some traction in the unenviable task of effecting policy change in the teeth of enormous vested-interest resistance. [1,2,3,4,5]
But the nation states (who are in theory if not in practice the custodians of money-issue privilege) are being increasingly undermined by globalisation. Multinationals spearhead a race to the regulatory bottom. Trade trumps virtually any ethical or environmental concern and the sole recognised measure of progress is increasing GDP.
Against this background, the oft-inferred libertarian ambition behind Bitcoin – taking back money-issue-control from the state – hardly seems worthwhile if that control is already being outsourced to corporations. Anyway, setting aside the issue of Bitcoin’s democratic credentials , we can still assert that its underlying technology, the blockchain, does open up possibilities for decentralised co-operative management of information, and will clearly pave the way for the development of other digital currencies.
Given the multi-faceted and anarchic but energetic nature of cryptocurrency development it is starting to look as if the nation state’s only choice might be how exactly it wishes to be undermined – by globalised capital from the inside or by citizen-led ‘digital heteropia’  from the outside. Or maybe both at the same time, meeting in the middle to contest the emaciated remains of national sovereignties.
We have suggested elsewhere that the attitude of new currencies to fiat can usefully be made explicit – as fiat-friendly, fiat-cautious or fiat-averse . But there is probably a fourth category – fiat-agnostic – for currency designers that haven’t the time or inclination to understand precisely the nature of fiat-toxicity.
The motivation here springs from an identification with a given sub-economy, and a desire to preference that sub-economy over the outside-world. The most common manifestation of this is where the sub-economy is a town or identifiable region that senses it is losing its sense-of-place under an onslaught from major brands and centralised supply. The preference then is for genuinely locally-rooted independent businesses and for keeping money circulating in the local economy, against the tide of centralised supply chains.
Currency projects of this sort, like the proxy-pounds, can be seen as much as local-identity reenforcers as economic interventions. Claims are made for increases in ‘local-GDP’ due to increase in velocity of exchange, but real additionality is difficult to prove. Some substitution of local for remote supply surely takes place, but the key objective – the creation of new local businesses – is elusive. The heavily centralised (out-of-area) supply of stuff-of-life transactions such as food, energy, shelter makes this a huge challenge.
Local economy currencies tend to attract activist support during start-up, but can struggle to retain a progressive mindset. Recently a tendency has been observed for them to attempt to grow via inter-connection , thereby arguably undermining the local-preferencing objective. Other ways of keeping up the progressive enthusiasm include new technology, local council integration and aggressive anti-consumerism.
Value-led currencies are the most potentially interesting of the motivation-types because they are exploring the ability of a currency to be used for good. This positioning sets aside the economics professions conceit that money is neutral and replaces it with the assertion that if monies always carry values/ promote behaviours/ trigger specific outcomes then designers should be explicit about their objectives and how they are to be achieved. 
However, to move from no-brainer propositions such as ‘transactions are not all equal’ and ‘growth is not always good’ to a rigorous theory of value-led currencies is a bit of a challenge. It is hampered by the fact that there aren’t too many examples to study. The best examples are perhaps the Fureai Kippu  elder-care currrencies of Japan and the timebanks of various flavours that facilitate the exchange of participant-hours.
Review of the literature does suggest a number of challenges for such currencies. Staying true to themselves is perhaps the most severe. There is always the temptation to try to scale inappropriately by extending into non-core transactions. This is not to say that such scaling is always unwise – more that the potential value-conflict it surfaces should be carefully scrutinised and assessed. Part of the pressure for scaling is the underlying assumption that currencies must be as widely used as possible. But in a future diverse monetary eco-system this rationale potentially disappears. Another part of that pressure is the human desire for what might be called qualitative growth. The operators perhaps tend to get bored if the game isn’t perpetually changing. Tech developments deliver a continuing stream of possible futures and it seems unadventurous to ignore them.
Since around 2010 there has been a surge of interest in Behavioural Economics  – fuelled to a large extent by the Nudge unit set up within the UK Cabinet Office  and now being replicated world wide. There is likely some read-across from this experience to value-led currencies. One particular potential mindset-clash however needs to be addressed. The would-be discipline of Behavioural Insights, like it or not, carries a hint of citizen manipulation with it that sits ill with the sort of fully participative governance anticipated for value-led currencies. Put it this way – if we are going to be nudged then its important that we buy into the process and are aware of the intervention. It is clearly a hierarchichal process with the nudger and the nudgee. It would be good to see the nudger nudged; the policy makers directionally influenced via an understanding of their underlying psychology – #reversenudge .
The proposition that corporations should be free to issue their own currencies and have them competing in a free market goes back to the seminal paper by Hayek [14,15], probably before. Arguably, the emergence of multi-nationals with multiple brands and a diverse range of ultimate products should encourage this approach, but as yet no examples seem to exist.
Of course, we have a proliferation of loyalty schemes but these tend to operate at the individual brand level, (though coalition loyalty schemes such as Nectar are obviously an attempt to widen the redemption options available). There does seem to be a recent pattern of the ‘superbrand’ asserting ownership of its sub-brands. Unilever comes to mind, as does the ‘peel-off’ corner on Danone ads. So there is probably a brand bun-fight going on internally at some of these organisations. Indeed, taking the Unilever connection further, their recent well-resourced attempts at CSR initiatives  might indicate a fertile ground for a value-based superbrand currency.
Loyalty schemes on their own are significant for one reason. They have driven the engineering of an alternative payment mechanism – when I go into Costa I can pay in cash or in Costa points if I have enough of them. The significance here is that the Point of Sale systems, settlement and back office systems permit it. The card swipe takes my Costa loyalty card and routes data to the back-end Whitbread servers rather than to the merchant acquirer. So loyalty systems are paving the system way for the diverse monetary ecosystem that is coming.
Summary & Conclusions
There will clearly be mixed-motive currencies – indeed most new and developing currencies will want to explore the various motivations and set out for themselves – ideally explicitly – their balance of motives. This process should not be seen as an additional chore, rather it can be part of developing a coherent and compelling narrative for a currency project – feeding into statements of mission and values in a way that gives a currency real brand-value. It can act as a guide to future action and as a mandate with external partners including potential funders. The tensions that the process of motivation disclosure surfaces should themselves be treasured. They will form an important part of the agenda going forward, and their publication will underline the transparency of governance that is needed for real progress. Feasta would be happy to play a part in such motivation audits.
: Swiss group says it has signatures for ‘sovereign money’ vote
: Sovereign Money : Joseph Huber
: Creating a Sovereign Monetary System: Positive Money
: Iceland looks at ending boom & bust with radical money plan [March 2015]
: International Movement for Monetary Reform: Coalition of 22 national sovereign money groups
 For example around 2% of BTC addresses control over 92% of BTCs:
: Miscione G & Kavanagh D : UCD School of Business, University College Dublin [July 2015]
Bitcoin and the Blockchain: A coup d’état in Digital Heterotopia?
[9}: For example the ‘Town Pound’ project
: Series of articles on Intentional Currencies at:
: Hayashi, M. (2012) ‘Japan’s Fureai Kippu Time-banking in Elderly Care: Origins, Development, Challenges and Impact’ International Journal of Community Currency Research 16 (A) 30-44 <www.ijccr.net>
: Hayek’s Plan for Private Money:
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