This paper focuses on the financing of investments in long-term assets in the Commodity-Money-Commodity (komoko) monetary system (KMS). The KMS is a special, currently still theoretical version of mutual credit, first introduced in the 2016 summer issue of the IJCCR journal. In dealing with capital goods financial circulation is indispensable. However, financial circulation is prone to speculation, a practice not at all endorsed by CC (complementary and community currencies) communities. Separation of the real and financial exchange circles introduced in the original KMS paper is a method by which community currencies can dispense with speculation and other forms of potentially harmful financial circulation. Separation of the real and financial exchange circles proposed by the original KMS paper is based on a rigid, rule-based barrier between the real economy – which produces new goods and services on one side, and the financial economy – which deals with the exchange of old durable and capital goods on the other. This separation method may, however, be potentially either too cumbersome for businesses or too easy to evade. An improved method of separation of the exchange circles is proposed which basically eliminates the elements of the rule-based barrier and substitutes it with a new feature called inverse maturity of deposits. To implement inverse maturity of deposits, the KMS evolves from a plain ledger-based currency into a form that resembles accounts payables and accounts receivables. This new form of KMS which tracks the maturity of credits (demand deposits) puts the KMS in stark contrast to the existing fractional reserve banking which tracks the maturity of loans i.e. debits. The paper discloses how the KMS, featuring inverse maturity of deposits, dispenses with excessive financial circulation without impeding the real circulation and at the same time supports the use, exchange and production of capital goods. This renders KMS a currency that can crowd out legal tender.
Mutual Credit, Finance and Investment, Velocity of Money, Inverse Maturity, Liquidity
To cite this article: Kavčič, S (2020) ‘The financing of investments in long-term assets and the inverse maturity of deposits in the commodity-money-commodity type of mutual credit’ International Journal of Community Currency Research Volume 24 (Winter 2020) 61-73; http://www.ijccr.net; ISSN 1325-9547; DOI http://dx.doi.org/10.15133/j.ijccr.2020.005
University of Georgia Department of Anthropology, Email: firstname.lastname@example.org
Thousands of local mutual credit networks and other complementary currency systems have been developed worldwide in the last several decades. Many of these systems strive to support local economic activities such as small-scale agriculture. Although mutual credit systems and similar schemes have had significant social and economic impacts under certain conditions, they often fail to meet participants’ goals. Nevertheless, new mutual credit systems continue to emerge. This paper analyzes the complete transactional history of one such system—the Hudson Valley Current (HVC)—from March 1, 2014, to February 28, 2015. Building on existing community currency metrics, a transaction performance ratio is introduced to understand credit flow within the HVC. Network linkage densities are also calculated to gauge potential for social capital creation. While the HVC has not been used as a significant means of exchange for farmers, metrics indicate that the HVC is a generally viable source of mutual credit and social linkage creation for some participants, at least in the short-run. Continued application of these metrics by mutual credit administrators, combined with purposeful partnerships with local farmers, might allow any potential benefits of system participation to be maintained and extended to include local farmers in a significant way.
To cite this article: Andrew Bonanno (2018) ‘Assessing Local Mutual Credit as a Socioeconomic Tool for Farmers’ in New York State’s Hudson Valley’ International Journal of Community Currency Research 2018 Volume 22 (Winter) 89-102 <www.ijccr.net>ISSN 1325-9547. DOI: http://dx.doi.org/10.15133/j.ijccr.2018.008
** Karlsruhe Institute of Technology (KIT), Karlsruhe
The goal of this paper is to propose an open platform for secure and interoperable virtual community currencies. We follow the established information systems design-science approach to develop a prototype that aims to combine best practices for building mutual-credit community currencies with the unique features of blockchain technology. The result is a specification of an open Internet platform that enables users to join and to host customized community currencies. The hosted currencies can be classified as credit-based future type of money with decentralized issuance. Furthermore, we describe how the transparency, security and interoperability properties of blockchain technology offer a solution to the inherent problems of existing, centrally operated community currency software. The characteristics of the prototype and its ability to fulfil the design-objectives are examined by a relative evaluation against existing payment and currency systems like Bitcoin, LETS and M-Pesa.
To cite this article: Friis, G. and Glaser, F. (2018) ‘Extending Blockchain Technology to host Customizable and Interoperable Community Currencies’ International Journal of Community Currency Research 2018 Volume 22 (Summer) 71-84 <www.ijccr.net> ISSN 1325-9547. DOI: http://dx.doi.org/10.15133/j.ijccr.2018.017
This paper presents a novel socio-psychological analysis of the motivations and experiences of mutual credit members in the United Kingdom and in the United States. Primary data comprised of interviews and participant observation, supplemented with secondary data analysis of organisation documents, and a review of the literature in psychology, sociology and economics. Group members were motivated to secure personal resilience against hardship, and the personal agency that results from this, along with the experiences of community and cultural identity positioning, motivates engagement. Consequently these groups are defined as cultural communities offering personal resilience to members through informal reciprocity. This approach, which prioritises the social aspects of exchange, has implications for the design of complementary currencies, particularly mutual credit initiatives, and demonstrates the value of engaging with the fields of psychology and sociology in developing interdisciplinary understandings of alternative economic practice.
To cite this article: Smith, C.J. and Lewis, A. (2016) ‘Psychological Factors influencing the Use and Development of Complementary Currencies’ International Journal of Community Currency Research 20 (Summer) 2-23 <www.ijccr.net> ISSN 1325-9547. DOI http://dx.doi.org/10.15133/j.ijccr.2016.001
This paper is a report on the development of a complementary currency system that allows Kenyans in informal settlements to trade goods and services and meet sustainable development objectives. The system in this report, Bangla-Pesa, uses a ‘collaborative credit’ model through a network of local business, whose owners often struggle to meet their basic needs (also known as ‘mutual credit’). The paper documents the reasons for its creation, how it was launched, the immediate positive benefits upon launch, and some of the difficulties faced. Bangla-Pesa is shown to have facilitated, upon its launch, exchanges of roughly 50 Euros in value per day among 109 businesses, which is projected to raise living standards in the community primarily through the utilization of excess business capacity. After only a week of circulation – Bangla-Pesa represented an estimated 22% total trade among community members. This system’s implementation and governance model are detailed with the aim of improving upon and replicating the model for future sustainable development programs.
William O. Ruddick, Morgan A. Richards, and Jem Bendell
To cite this article: Ruddick, W., Richards, M. and Bendell, J. (2015) ‘Complementary Currencies for Sustainable Development in Kenya: The Case of the Bangla-Pesa’ International Journal of Community Currency Research 19 (Summer) 18-30 <www.ijccr.net> ISSN 1325-9547 http://dx.doi.org/10.15133/j.ijccr.2015.003