The United Nations Non-Governmental Liaison Service (UN-NGLS)
held a Special Session on Alternative Finance and Complementary Currencies following on from the UNRISD conference. The session examined the potential and limits of a range of innovative financial and monetary tools—especially community banks and complementary currencies—to scale up social solidarity economy (SSE) initiatives and build more resilient, socially inclusive and environmentally sustainable territorial development strategies. It provided an opportunity to better understand the diversity and complementarity of these emerging instruments, which are still little known and understood in mainstream academic and development policy circles.
Some 80 participants attended the plenary and the following two breakout sessions. With presentations that included conceptual papers as well as case studies from Latin America, Europe and Africa, a number of cross-cutting issues emerged.
- There is a rich diversity of complementary currency approaches, ranging from micro- exchange networks to more elaborate local and regional currencies with active participation of SSE producer and consumer networks and local authorities. In this time of crisis, such initiatives are growing in number—a phenomenon that was witnessed also during the Great Depression. Could these schemes, if adequately designed and governed, serve to address the current employment crisis, and to support durably transformative development agendas to meet social and environmental objectives at the territorial level?
- Existing research shows a number of blind spots, notably regarding the use of complementary currencies in relation to broader financing for development strategies, as well as legal questions in relation to monetary, regulatory and fiscal authorities. For example, is it possible to pay part of local taxes in complementary currencies? There are examples of this in Brazil, but more research is needed in these areas to guide initiatives that are still operating in a “grey zone”.
- The combination of community development banks and the use of complementary currencies can show strong results in terms of building local productive capacities, local purchasing power, while ensuring the wealth generated in the community is reinvested locally. In the case of Brazil, community banks have the status of a social organization rather than a financial institution. This means that all local currency issued has to be fully backed by the national currency, unlike commercial banks which only need a fraction of reserves. However, the demand for these currencies is much greater than the capacity to supply them. What are the potentials and risks of allowing more leverage in local currency emission?
The special session was organized by UN-NGLS, in cooperation with UNRISD, ILO, Palmas Institute Europe, Global Fund for Cities Development (FMDV), Institute for Leadership and Sustainability (IFLAS) of the University of Cumbria, Veblen Institute and New Economics Foundation representing the European Union Interreg project: Community Currencies in Action (CCIA).