Transaction Net: How Currency Systems Work (a Money Map)

[Bob McDaniel]

http://www.transaction.net/money/
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http://publish.uwo.ca/~mcdaniel/

Title: Transaction Net: How Currency Systems Work (a Money Map)

How Money Systems Work Publications Payment Methods Glossary of Terms The Money Conference Transaction Net features Enabling Markets Online San FranZiskGo! Web Conferencing Articles on the Future of Money Doing Business Online Create Your Own Currency Paulina Borsook's Unofficial Home Page Spin Doctor's Web Design 101 Online Payment Methods About Transaction Net the Edge of Science Pick Up Tix "the Internet and the Future of Money" "Internet Currencies for Virtual Communities" "Beyond Greed and Scarcity" "Community Currencies: a New Tool for the 21st Century" "A 'Green' Convertible Currency"Other Economic Theory on the Net Feng Shui: It's All About Flow   Currency Systems Backed Currencies Ithaca HOURS LETS National Currencies ROCS Time Dollars Complementary Currencies How Money Systems Work What is Money? Design Characteristics of Currency Systems Social Implications of Currency System Features Interact What is Money? Money is an agreement The agreement may be voluntary or coerced, conscious or unconscious, and may fluctuate with time or remain fixed. within a community All kinds of communities--large and small; local, national, international, or virtual; cooperative or competitive--may create such an agreement. to use something as a medium of exchange. The money itself can be issued en masse by a central authority or created ad hoc by two consenting parties in a mutual credit system; it may store value or merely mark transactions; it may be backed or valued with something tangible or merely by the issuing authority; and it may take any shape--coins and bills, some chalk marks on a blackboard, or bits of data inside a computer.   What is Money? Design Characteristics of Currency Systems Social Implications of Currency System Features Interact Design Characteristics of Representative Currency Systems A growing number of currency and payment systems, each oriented toward different social and material incentives, are available for use today. The most appropriate one for any given transaction will depend on the needs and objectives of those taking part in the exchange. We present here an overview of the design characteristics of some representative currency systems, all of which are explained in further detail in our glossary of important terms and concepts and under discussion in The Money Conference. National Currencies Ithaca HOURS Time Dollars LETSystems WIR ROCS Unit $US, DM, Fr, etc., mediated through $US 1 HOUR = $10 U.S. (bills) hour of service Green $ = $ $ (SF) Hour How Issued Central Bank and constituent banks Center Mutual Credit Mutual Credit Center + Mutual Credit Mutual Credit Details Debt-based fiat money, bearing interest; thus promoting competition. Backed fiat currency whose supply must be managed. Usually fixed exchange rate: your hour = my hour Most prevalent local system Uses national currency (SF) for unit of account; WIR for settlements. Negotiated exchange rate Demurrage charge on both + and - balances Main Benefit Legal Tender Ease of Use: Bills Simplest System Ease of Use: Single pricing for national and green currency Oldest and largest local system: 80,000 members; $2 billion/year) Synthesis of most robust features of all other local systems   What is Money? Design Characteristics of Currency Systems Social Implications of Currency System Features Interact Social Implications of Currency System Features Fiat money requires by definition an Authority (a Central Bank, in the case of national currencies) to be issued and to keep its value. Backed currencies can be issued by whoever owns the commodity or service which backs the currency. Scarce currencies will tend to induce competition among participants. All our national currencies are created by interest-bearing bank debts. They are scarce because: "Debt money derives its value from its scarcity relative to its usefulness." --Jackson and McConnell, Economics. (Sydney: McGraw-Hill, 1988.). currencies created by interest-bearing debt generate a negative sum game among participants (see "The Eleventh Round"). Sufficient currencies (not to be confused with overabundant inflated currencies) are exemplified by mutual credit systems such as LETS and Time Dollars, which are created as a debit and credit by the participants themselves at the moment of a transaction and thus always in sufficient supply. They are therefore more compatible with gift economy- like social bonds. Currencies that store value (such as any commodity-backed currency, including electronic forms of it such as E-gold) encourage hoarding, and therefore competition. Currencies with demurrage charges discourage hoarding and thus encourage transactions and cooperation among participants.   What is Money? Design Characteristics of Currency Systems Social Implications of Currency System Features Interact Join us in The Money Conference, where we hope to compare insights on all kinds of money systems--old, new, high- and low-tech, real or theoretical--and to synthesize from our shared experience wiser and more efficient models of exchange media. The Money Conference Sign up for conferencing Motet conferencing tutorial What do you think of this site? Recommended URLs: Any links to Transaction Net sites? How could we improve this resource? Name and/or e-mail address: Would you like a reply? Yes No How did you hear about us? top of this page How Money Systems Work Publications Payment Methods Glossary of Terms The Money Conference http://www.transaction.net/money/index.html [EMAIL PROTECTED]