1.4. Sustainability of monetary diversity
1.4.1. Key movements for change
Let us first look at the two key movements for change offering alternatives to the current monetary system, and their implications.
- The reform movement. This movement contemplates changing the monetary system by political means, proposing new laws to modify the current system, but retaining as much as possible of what already exists. The current system would transition to a system of state-issued, sovereign money, with no debt, and a reserve bank based entirely on savings, with no interest. Money would not be representative of any specific asset, other than the obligation to admit it as a means of payment of an amount owed. The proposal is for fiat money based on the faith or confidence of the community, that is, not backed by precious metals or anything other than a promise to pay on the part of the issuing party. The movement proposes replacing the current monetary system, eradicating and removing the root cause of the current planetary unsustainability. Organizations affiliated to the movement include, in Spain, the Dinero Positivo association; and, internationally, the American Monetary Institute, Positive Money, the International Movement for Monetary Reform, Monetative and the Swiss Sovereign Money Initiative. Writers who subscribe to the movement include Ben Dyson, Joseph Huber and Stephen Zarlenga.
- The transformation movement. This movement proposes change to the monetary system based on the emergence and development of social, cooperative and collaborative economy experiences, and their alternative mediums of exchange. The proposal is for a monetary system based on multiple currencies, each of which represents the promise of a producer of goods, products or services, to deliver a real asset in exchange for the currency. The system would use different types of money according to its function: conventional money primarily as a store of value, and alternative mediums of exchange exclusively as mediums of exchange and payment. This movement proposes to coexist with the current monetary system, complementing it and minimizing its negative effects. Organizations affiliated to the movement include, in Spain, the Instituto de la Moneda Social (Social Currency Institute); and, internationally, Community Currencies in Action, the Research Association on Monetary Innovation and Community and Complementary Currency Systems, the International Journal of Community Currency Research, the Complementary Currency Resource Center, the New Economics Foundation and Community Currency Magazine. Writers who subscribe to the movement include Bernard Lietaer, Gill Seyfang, Thomas Greco, Michael Linton, Edgar Cahn, David Boyle, and the late Margrit Kennedy.
It is important to highlight the clear difference between the three functions of money (medium of exchange and payment, store of value, and unit of measurement of the value of things) in relation to each of the movements for change. This is because there is an essential contradiction between the first two functions: if money is a store of value, it is withdrawn from circulation, and therefore serves no purpose as a medium of exchange and payment. The stance of the transformation movement is that the two functions should be separate, with the creation of two different types of currencies. This is because the transformation movement perceives money, on the one hand, as a measurement of the value of things, but fundamentally as a medium of exchange and payment, and not as a store of value. The opposite is true for the reform movement, which continues to apply the three functions of money to the one currency.
In this COURSE, we analyse alternative currencies and the transformation movement in detail, as well as all the potential implications of the introduction of monetary diversity.