Social currency: creating value for the world we want

November 26, 2021

The transition from a traditional economy to a digital economy has resulted in the emergence of a number of digital tools and technologies.  Social currencies stand out as one technology that is designed to target local, social, ecological and human development.

Created in order to stimulate both the economy and sustainable development, social currencies have emerged as a means of facilitating transactions among a community of members to exchange on a free basis.  Although limited both in terms of region as well as scale, social currencies are often referred to as “community” currencies and tend to be associated with community networks and grassroots organizations.[1]

Characteristics and functions

According to experts, social currency systems interpret economic and market aspects based on a social context and certain logic of reciprocity and redistribution.  In this sense, they are understood as promoting trust, equality, cooperation, synchronicity, holism and interpersonal relations.[2]  Whereas traditional currencies function as a means to store economic value,[3] social currency systems seek to avoid practices that increase inequality, including speculation, arbitrage and accumulation of surplus.[4]

Social currencies in practice

Social currencies have existed for centuries.  Their source can be traced back to ancient Egypt periods and European feudal systems. For example, European cathedrals in the Middle Ages were financed by the “breakteat,” a form of local currency that was used to pay workers who contributed to their construction. Various forms of social currencies were also established during the Great Depression of the 1930s, including the German Wära (declared illegal in 1931), the Austrian Wörgl and the Swiss WIR, which still exists today.[5]  Other examples can be drawn from more recent history: 

• The Sol-Violette was launched in 2011 in Toulouse, France, designed to encourage a society of responsible consumption. It seeks to give meaning to economic exchanges by forging links between actors within the solidarity economy. Sol-Violette is accepted by food and transport companies and also allows payment for local and cultural services, each fulfilling different criteria.[6]

• Banco Palmas is an initiative of local currency and microcredit that has existed since 1998 in the Palmeira neighborhood in Fortaleza, Brazil.[7] The main objective behind its creation was to foster economic and social development in the area, and it was based on a very simple idea: preventing resources and wealth from leaving the neighbourhood for other more affluent areas in the city and encouraging local production and consumption based on the logic of a solidarity-structured economy.[8]

• LETS (Local Exchange and Trading System), another known example of social currencies, was created by Michael Linton in Canada in 1983.[9] The LETS can be interpreted as a modern version of barter trade and it represents a system that promotes exchange and trade on a limited scale, based on the principles of cooperation, trust and mutual assistance. The implementation of LETS results in a parallel market and an alternative financial system that offers local products or services exchanged by the system’s participants using a currency that is not subject to fluctuation and whose denomination and value is determined by common agreement.[10] 

Creating value for the world we want

In addition to the practical benefits, social currencies bring greater consciousness to what we value and what we purchase in a way that traditional currencies do not.  We are prompted to question our behavior—whether in terms of production, consumption, trade or exchange. In this respect, social currencies go towards creating a world that is more respectful of humans, nature, justice, solidarity, freedom and brotherhood.

[1] Seyfang, G., and Longhurst, N. 2013 “Desperately seeking niches: Grassroots innovations and niche development in the community currency field”. Global Environmental Change, (23:5), pp. 881-891.

[2] Lietaer, B. (2005): El futuro del dinero: cómo crear nueva riqueza, trabajo y un mundo más sensato, Errepar-Longseller, Argentina.

[3] Orzi, R. (2017): “Otra Moneda Para “Otra Economía”? La necesidad de las monedas complementarias para el desarrollo sustentable de los emprendimientos de la economía social y solidaria”, Revista del Departamento de Ciencias Sociales, Vol. 04, 03, 155-171.

[4] Primavera. H. (2010): “Social Currencies and Solidarity Economy – An Enduring Bond of Common Good”, Working USA: The Journal of Labor and Society, Vol. 13, 1, 41-59.

[5] Corrons, A. (2017b): “Monedas complementarias: dinero con valores”, Revista Internacional de Organizaciones, 18, 1886-4171.

[6] For further information on the project, the documentary film Une monnaie solidaire is available here.

[7] See http://innovafrica.org/en/project/banco-palmas/

[8] Banco Palmas, 2007, Uma história diferente. Criação Coletiva do Fórum de Arte e Cultura do banco Palmas. See further information here.

[9] Corrons, A. (2017b): “Monedas complementarias: dinero con valores”, Revista Internacional de Organizaciones, 18, 1886-4171.

[10] Gisbert, Q.J. (2010): Vivir sin empleo: trueque, bancos de tiempo, monedas sociales y otras alter nativas, Barcelona: Los libros