Complementary currencies can be seen as alternative monetary systems
to the official money. Except foreign reference currencies like the
Dollar which sometimes substitute weak national currencies of small
economies. The Dollar is in this case also a CC.
But I will speak about complementary currencies which behave and
benefits society different to the official money. Countless approaches
for CC are possible but most of them would I roughly subdivide into 3
interest free money (Freigeld)
Time accounts - local exchange time systems (LETS)
barter trading systems - electronic market places
Complementary currencies are mostly used for local business cycles and therefore also
called community currencies.called community currencies.
Money of CC will usually be created by exchange of official money and therefore they
are connected and strongly dependent from official money, also concerning price
formation. But CC money can also accrue independently mostly by electronic market
In times of non crisis they will mainly be used to support local business cycles.
In times of crisis they are useful to keep daily life business running, when legal money
tends to escapes into off-shore financial places and gets narrow as it usually does during
deflationary crisis. Due to this CC‘s also sometimes called emergency money.
As business cycles getting more and more global, community currencies might lose
efficiency or let us say in a better way – it needs more and more time and efforts to
reactivate local business cycles. A success like Woergl might not possible again in the
But as we know that CC‘s can support and stabilize activities of the real economy - so it
could be reasonable to spend some thoughts onto transformation of this behavior onto a
more global scale?
In the meantime it is obviously that our current monetary system - which is based on
money creation by credits and interest rates - tends to lose stability in advanced time. Itmoney creation by credits and interest rates - tends to lose stability in advanced time. It
increases inequality and lets people suffer.
If we would want domesticate capitalism – domesticate capitalism means let work the
capital for the people and not people for the capital – then it is useful to have look closer
onto the nature of money and to think about alternative monetary systems.
Therefore it is very important to work on CC‘s. You are in front of new economic
One of the countless approaches is the neutralization of monetary systems.
Orthodox economist says that money is a neutral veil and does not influence the
activities of the real business, visible trading - it is only a medium of exchange. But this
contradicts our daily life experience. To own money or not influences our decisions very
strongly. Especially the big business starts to decide for us and can force us in situations
which we don‘t want to have and which we can‘t influence as individuals – for example
It means, neutralization of money is something which we don‘t have, it is something
which we would want to have, if want domesticate capitalism. But how we can reach this
Last conference I spoke about this subject presenting a CC with a absolute value and
constant amount of money by declaration. I will explain this idea again – briefly.
Coming from the question „is it possible to find this absolute value for
money“ Could I recognize only one answer
and this answer is the total
creating a complementary currency which represents the total, let us
name this currency ANNA and let us give the never changing value or
never changing money supply of ONE
leads this complementary currency to the following statement...
.. one ANNA is equal to one common world
If we transform this idea to the abstract world of money and numbers
leads it to the equotion
one ANNA is a equivalent to the total of world money supply
... where World Money Supply represents the conventional currencies
and behaves like this conventional currencies. It means, Coming from
the paritcular going to the total needs addition. For example 1000
DOLLARS = 1000 *times one DOLLAR.
ANNA behaves contrary , because ANNA does not allow additional
money supply due to the never changing values of ONE. Coming from
the total going to the particular needs division. This is not very
practicable for daily use of money. But there are two points connecting
this two monetary systems together.
The first one I have already mentioned. It is the total – One ANNA is
equal to WMS.
The second one is the particular . One unit of a currency is equal to One
divided by WMS expressed in this currency
This can be used for monetary scaling
And monetary scaling can be used as a currency exchange
... where the exchange rate is defined as the share of one unit of a
currency onto ANNA...
... and as a second important parameter, the share S of the complete
currency onto ANNA...
As the first country with the first currency participate onto the monetary
system of ANNA, the share S of this currency must be fixed
This leads to the possibility to determine the exchange rate of this
currency independently from other currencies.
The fixation of the share S is a declaration of the country to
participate into the System. It is also a declaration of the world
community to accept this participation. It would be the birth of a
new financial design
The exchange rate of the participating currency is fixed and can be only influenced by
parameters in the divider of the equation for the determination of exchange rates.parameters in the divider of the equation for the determination of exchange rates.
These parameters are
money supply of the currency
and the balance of trading described by
foreign liabilities and foreign receivables
or foreign money which will be lent from other counries and added to the money supply
Or money which will be lent to other countries and subtracted from the money supply.
It is a new way of monetary policy and means to take care about this divider.
This kind of monetary policy remains completely in self determination and responsibility
of the participating country and economy.
It is different to the current situation which is dominated by the financial markets – the
In fact is it a cross rating system via ANNA and allows to implement a
geographically independent currency area
It can start up with one currency and would also allow to end up with the
implementation and participation of all national legal tenders.
This currency area exist parallel to the FOREX and is connected to the
FOREX for global trading
Due to the neutralization is it possible to protect this currency area from
the attacks of FOREX and the escape of money into off-shore financial
This new monetary design consists of the protected currency area with
the neutralized national inside currencies and the undomesticated
FOREX with the conventional outside currencies
Especially for poor and suffering economies is it necessary to implement
a intermediary exchange currency, which I called FENA. To make the
inside national currencies with CC behavior comparable and
exchangeable to the conventional outside currencies.
FENA is the share of the outside currencies onto ANNA and represents
the outside currencies as one currency with one exchange rate onto the
As Vice versa FENA represents the inside currencies as one currency
with one exchange rate onto the outside markets.
What are the benefits of this new monetary design?What are the benefits of this new monetary design?
A neutralized currency area allows to implement national currencies with
the behavior of CC. The important point is - these currencies can
accrue and survive completely independent from the behavior of the
FOREX and conventional currencies, but they are still connected to
this FOREX and international trading
1) It is possible to implement national low interest currencies and
national time account systems which offers the opportunity to use the
effect of reconciliation, which is the ultimative solution for debt crisis
2) A neutralized currency exchange system balances foreign trading
automatically. It is a exchange rate regime with self balancing
What is the effect of reconciliation
It is the reconciliation between the exchange rates of debtor and creditor
Exchange rates in ANNA are related to money supply
where the exchange rate of the interest based currency decreases in
correlation to the exponential growth of money supply of this currency
caused by the interest compound – as shown with the red (bottom) line in
While the money supply and therewith the exchange rate of the interest
free money keep more or less constant due to the absents of interest
A heavily indebted poor country which will run into insolvency and
changes into a interest free national currency has only to wait for the
decreasing exchange rate of the creditors currency.
Nevertheless - the Debtor still has to repay the liabilities, but only in the
absolute value of ANNA and the creditor get back the outstanding
receivables, but only in absolute value of ANNA. It is more than fair for
the creditor and debtor - it is this reconciliation. It interrupts the helix of
geometrically growing debts and hinders the creditor to exploit the debtor.
The effect of reconciliation devaluates interest based money in tax
havens and reduces in a long term consideration the escape of this
money into tax havens
balance of trading will be considered automatically by additional
parameters in the divider of the equation for exchange rates
As already explained - beside money supply are these
1. foreign liabilities = foreign money lent from other countries, which will
be added to the money supply, which represents trading deficit
2. foreign receivables = money which will be lent to other countries and
subtracted from money supply, which represents trading surplus
It influences the divider in the following way
if the number in the divider increases by increasing money supply or
increasing foreign liabilities caused by trading deficit – exchange rate
If the number in the divider decreases by increasing foreign receivables
caused by trading surplus - exchange rate increases
It influences the price of currencies in the way to support balancing of
It is also possible to transform the idea of neutralization onto currency area of the EURO.
As the EURO is a strong currency, which does not need protection can it be done as aAs the EURO is a strong currency, which does not need protection can it be done as a
inner European solution – it is a in between solution which uses the benefits of
neutralization for inside trading but without protection against the FOREX
It would lead to a reimplementation of national currencies, but in this case neutralized,
for the national trading and the possibility to implement national currencies with the
behavior of CC‘s.
The EURO would still be needed for foreign trading like the intermediary exchange
currency FENA. But contrary to FENA the EURO would be conventional traded on the
FOREX with the usual ups and downs of exchange rates to outside currencies.
The advantage of this solution is, that it does not need the approbation of the FOREX
and outside countries, because the FOREX and the outside countries would see only the
EURO and would not have any access to the new national currencies.
It offers the already described advantages
to balance the trading I within the European Union and
to manage public debts by the effect of reconciliation.
This neutralization of monetary systems is a completely deductive approach -
still at the very beginning.
It would be nice to get a verification validation and consideration on a more
scientific level. There are many topics to explore f. e.
Verification and validation of the concept with the focus on
•World money supply and exchange mechanism or
simulation and adjustment of exchange mechanism f. e.
•Response time of exchange rate determination
•Influence of rounding errors
•Expectations of exchange mechanism on market behavior
•And so on
I would be pleased if some students would be interest in a research on this topic
and their institutes would accept this topic.