The Problem With Local Currencies

The problem With Local CurrenciesMany have suggested the use of local or even competing currencies as a solution to the present economic crisis. Such currencies would provide flexibility and aid local economies.

While historically local currencies have benefited some localities, they do not always work. The problem is not always economic but rather in the manner in which they are administrated. A local currency without proper local leadership is almost always doomed to fail.

Author Bernard Lietaer claims a local currency can only succeed if there is a person or group gifted with vision, entrepreneurial capability and charisma. Leaders need “vision to see that another way is possible, and to adapt whatever model is used to local circumstances, entrepreneurial capability to decide to do something about the situation, and be effective at it. And finally, charisma to convince your community to follow you” (Bernard Lietaer, The Future of Money: A New Way to Create Wealth, Work, and a Wiser World, Century, London, 2001, p. 231).

When any of these leadership characteristics is missing, Lietaer says theSubscription11 project with fail. Moreover, leaders must ensure continuity of their project over years and generations if it is to be successful. That is why local currencies are not instant solutions to the present crisis. The human factor is very important and must above all be addressed.