Workshop on Financial Micro Initiatives as tools for Sustainable Development

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van de Valk, Mark

Workshop on Financial Micro Initiatives as tools for Sustainable Development

Mark van de Valk
Strohalm, Utrecht, The Netherlands

Paper presented at the
2nd International Conference of the Environment Forum,
6-8 November, 1998, De Poort, The Netherlands

[This paper is as presented at the Conference, and has not been subject to editorial review by the IEF]


Sustainable development has four (major) aspects: the economical, ecological, the social and the cultural. In the world around us we can see a dominance of the economy with detrimental effects on nature & environment, social fabrics and cultural diversity. Also, we can observe a growing global awareness, rising living standards, more democracy and respect for human rights, more communication possibilities, more opportunities for women, better technologies; in many places, but not in all. We seem to be in need of economic structures that counterbalance the globalisation of the economy, especially the financial sector.

Many of the actions to be taken as part of (Local) Agenda 21 have to be taken at the local level. Local activities almost by definition support (or are compatible with) cultural and biological diversity. Local economic structures may promote the satisfaction of local needs making use of local resources. Money (or capital) is one of the local resources. We therefore are looking for systems that either provide local money or retain the available money within the local community (prevent leakage from the community to outside financers). Economic structures that facilitate producer-consumer contacts without the use of a kind of money can be interesting as well. All these systems together are called Financial Micro Initiatives (FMIs).

Financial refers to: having to do with money (or one of the functions of money)

Micro means: delinking from the globalising financial system, downscaling the size of financial structures to community level/ natural scales.

Initiatives are: activities that promote or are part of the empowerment of (groups of) people; that allow participants to develop together; that promote co-operation rather that competition; that grow bottom-up. These Initiatives can be taken by NGO’s, or by democratically controlled bodies. They may be commercial, if they have strong social and/ or environmental objectives.


The mission of Strohalm is to actively promote use of, research into, innovations of, experiments with Financial Micro Initiatives as tools for sustainable development. Within the restrictions of our kimited resources we strive to build a network for exchange of skills and experiences. Only in global co-operation of local groups we can hope to succeed.

Strohalm, Oudegracht 42, 3511 AR Utrecht, The Netherlands
tel + 31 - (0)30 - 2 314 314; fax + 31 - (0)30 - 23 43 986;

1. Exchange Systems

1.1 Clearing Systems/Mutual Credit

1.1.1 LETS

Local Exchange & Trading Systems. Local group of people trading goods & services, using a giral "local currency" of their own to facilitate trade. Trade consists often of home-made and second hand goods and non-commercial services, but in some places also professional products. Creates a social fabric, enhances purchasing power, stimulates environment-friendly economic thinking and acting.


LETSlink NL, Strohalm, Oudegracht 42, 3511 AR Utrecht, email

LETSlink UK, 2 Kent Street, Pourthsmouth PO1 3BS, Tel.: 01705-730639, Web:

LETSlink Scotland, 31 Banavie Road, Glasgow G11 5AW, Tel.: 0141-3393064,

LETSlink Northern-Ireland, 20 Beechwood, Barbridge County Down BT 32 YL, Tel.: 018206-23834

SELidaire (France):

TALENT-Experiment Switzerland, contact

SANE (South Africa New Economics), 53057, 7745 Kenilworth, Cape Town, South Africa, Tel.: +27-021-642718/647536, Fax.: +27-021-642718/647541 Email:, Web:


LETS-Senegal- Hassan Aslafy

1.1.2 Barter

Essentially the same technique as LETS, but much more formalised, because it is used for business-to-business trade. One difference which often occurs is that LETSystems have a "passive" organisation and Barter an "active" one: the organisation pushes trade by actively trying to bring together offers and demands. The WIR WirtschaftsRing in Switserland has been in operations for SMEs since the 1930s. Currently they have some 60.000 members and a turn-over of app. 2 billion SFR. annually.

Focus on SMEs: WIR, Auberg 1, 4002 Basel:

Focus on spare capacity: commercial barter US type:

Focus on Third Sector/ Social Economy: Euro Barter experiment. With help of the European Community four barter-systems are being implemented in four localities in Europe. Project manager is Ruth Anderson, Rural Forum Scotland,

Amsterdam has named it's experiment Amstelnet. Contactperson is Naima Challioui,

1.1.3 Time exchange systems

In Time exchange systems, the equality of mutuality between members is formalised in the exchange of hours of work, of whatever kind. The exchanges are not on a one-to-one basis, but in a group, making use of a money-like medium, much like in LETS. It can be strictly giral, or making use of paper notes, or coupons.

Time Bank, Palermo; contactperson M. Tabacchi;

1.2 Scrip

Scrip is the term for a small piece of paper which represents value. In theory any of the systems of category 1.1 (mutual credit, above) can use scrip, but in practice most scrip systems are essentially different from these credit-schemes. The only exeption up to date is the Tlaloc-system.

1.2.1 Local quasi-currencies

* Red Global del Trueque, Argentina. This system is the first known monetary system to issue unbacked money, one of the "idealtypen" of economic theory. More than 100.000 persons are actively involved in this alternative economy.

* Tlaloc, Mexico City, Mexico: The perfect balance between mutual credit and scrip. On the basis of having an account, every member is allowed to issue scrip.

* Ithaca Hours, Box 6578, Ithaca, New York 1485 The first modern experiment with locally issued money. People who or businesses that place an ad in a local magazine get up to eight Ithaca Hours to spend, on the conditions that they will accept Ithaca Hours as a payment themselves. One Ithaca Hour stands for an hour of work and is more or less equivalent to ten US$. Some 40.000 Ithaca Hours have been issued and circulate within the Ithaca community.

1.2.2 Time Dollars

This system is based on the principle that "my hour is as good as yours". With social work people earn "hours" that they can spend on education, legal advise, medical help and other socially beneficial activities. Time dollar is a service-based currency for volunteers. It was invented by Edgar Cahn, professor at the University of Miami, USA. He introduced the Time Dollar in retirement communities in Florida and New York City in order to allow people to meet the social needs that were no longer present in many existing communities.

Time dollars are earned by providing care for the sick or elderly and spent in buying care for oneself, family or friends. One Time Dollar per hour is earned by all volunteers. The administration on the system is similar to a LETS except that the co-ordinator matches volunteers to clients. This puts a responsibility on the co-ordinator which in a LETSystem is left to the individual members to negotiate.

Time Dollar, P.O. Box 19405, Washington DC 20036, USA

1.2.3 Negative interest scrip/stamp scrip

Wörgl is an example of a stamp scrip was used in 1932 in an Austrian town, Wörgl. The mayor of this village asked the Town Hall to issue 14.000 Austrian shillings worth of stamp to tackle unemployment, which was rated 35% during that time. The scrip was covered by the same amount of shillings deposited in the local bank. The next two years the scrip was used in the town. And during this period the town achieved full employment, many houses were repaired and repainted, taxes were being paid early and the forests around the city were replanted. The circulation speed of the stamp was fourteen times higher than the national currency (the Austrian shilling), so the same amount of money created fourteen times more transactions which led to the increase of jobs. This was due to a "tax", due on the first of the month, of one percent on every note. This payment was proved by a stamp on the note. Hoarding thus resulted in a "negative interest" of one percent per month.

Even though a legal appeal was made to the Supreme Court, the Central Bank disallowed the currency. The bank officials stated, that the right to create money was with the National Bank, not with a small village and that they had acted against the law by introducing special bank notes into the system.

1.2.4 Currency-board systems

Whenever a currency is totally backed by another currency we call this a currency board. Argentina's peso for example, uses this system to fight hyperinflation, succesfully. But also on a smaller scale there are successes. The island of Guernsey issues the "Guernsey Pound" which has a 1 on 1 backing with the english pound. The advantage is that the circulation of the Guernsey pound is much more local, thereby preventing leaking.

1.2.5 Waste bonus in Curitiba

Curitiba: shantytown-dwellers are paid bustickets for sorting and delivering their waste. The city thus gains a cleaner city with better health, and maximum capacity-use of public transportation. The shantytown-dwellers gain larger mobility. Some claim that the bus-tickets circulate as "money".

2. Saving & Credit Systems

2.1 Systems in conventional currency

2.1.1 Micro Credit

Very small loans for very poor people in group structure. Great success in many developing countries. Also some applications in poor areas in rich countries (Chicago, Lofoten). High ambitions and high connections (Hillary Clinton). The MicroCreditSummit organisationis "working to ensure that 100 million of the world's poorest families, especially the women of those families, are receiving credit for self-employment and other financial and business services by the year 2005".

Micro Credit Summit, 440 First Street, NW, Suite 460, Washington D.C., 20001 USA. Ph. +1 202 637 9600 fax 1 202 637 3566,

2.1.2 Ethical Banking

Banks have taken up investing in socially and environmentally sound businesses and projects. Check the European Network of INAISE for further details (see below).

2.1.3 Interest Free Banking

It is possible to operate a Credit Union or Bank without charging interest. Saving does not give you interest, but the right to take an interest free loan. On the loan an administration fee is charged to cover operational costs. However, no money can flow out of the group to external providers of capital.

Local, co-operative interest free banks: JAK Denmark. Contactperson Mrs. I.M. Ebbesen, Thorsovej 92, Grolsted, 8882 Farvang, Denmark.

A national interest free bank: JAK Sweden. Contactperson Mrs. E. Stenius, JAK Sverige, Vasagatan 14, 54150 Skövde, Sweden,

A national interest free fund (under construction): ASN Interest Free Fund. ASN Bank, P.O. Box 30502, 2500 GM Den Haag, The Netherlands, tel. +31-(0)70-356 9333 fax 361 7948.

2.1.4 Credit Unions

Collective saving, in order to make the savings accessible for the group members, preferably at low cost (=low interest rates). Avoids dependency on outside finance.


2.1.5 Rotating Savings & Credit Associations (ROSCAs)

In many countries people form groups for collective saving and/or credit. In principal, the members in turn get an amount of money at their disposal. Either as a loan, or as a sum that has been saved up and is therefore theirs to use. This varies from informal groups of friends or relatives that get together monthly to well-organised associations that save and give credit, often for special purposes. Like burial societies.

2.1.6 Accumulating Savings & Credit Associations (ASCRAs)

If the fund of a Rosca is not distributed regularly, but accumulates it is called an ASCRA. The members save collectively. The capital is "invested" in loans to one or more members of the ASCRA. As they redeem the loan and pay interest, the available capital grows, so that more new loans can be given to the members. Sometimes the collective savings are used for specific goals like schoolfees or religious happenings.

2.2 Systems in unconventional currency/ in kind

2.2.1 Regenerating Funds: animals & crops

Guinea Pigs, Peru. A household can get a "loan" consisting of five guinea pigs (whose meat and fur are used). After three months a new generation of guinea pigs is mature. Five are "paid back", the rest can be kept for further breeding.

Maize seeds, Zambia and seed banks, Bolivia: free seeds are handed out for sowing, but after harvest they are returned to be able to help other farmers.

2.2.2 Digital scrip: Points for environmentally sound behaviour

* GreenSmiles. An experiment in Friesland (in the north of the Netherlands). A health food shopkeeper issues GreenSmiles. The envirmonment friendlier your expenditure, the more GreenSmiles you get. Redemption takes the form of discount on certain products. It is essentially the same as AirMiles or any sort of stamp you may receive from your local shopkeeper. You save them up for a while and when your "card is full", you can get towels for free, reduction on entrance fees, a Christmas cake or whatever. Except of course that GreenSmiles depend on the environmental quality of your spendings, not (only) on the total amount.

* Waste Bonus. Following the example of Curitiba, Brasil (see 1.2.5), experiments are developed in Dublin, Ireland and Rotterdam, Holland. A similar thing is going on somewhere in the North of Italy (sorry, no details available). One can get points in return for the separated waste you offer for re-use or re-cycling. The points can be spent on public services like transport and/or second hand goods.

* PlusPunten. This form of digital money is being prepared in Rotterdam by Strohalm in co-operation with the Rabobank. People can earn PlusPunten on a chip-card by environmentally sound behaviour, and spend these point on environmentally sound products and services (for example earn them by recycling paper and spend them on public transportation).

3. Diverse systems

3.1 Co-operative structures

3.1.1 Food Box & Food Co-op, Community Supported Agriculture

Many different arrangements are made to collectively buy food. Especially organic foor is often puchased in such a way. Many organic farmers are supported by their costumers, are deliver their produce directly, e.g. once a week.

3.1.2 Consumers' Co-op

They come in many varieties too. The Seikatsu Club Consumers' Co-operative in Japan is the largest world-wide with some 220,000 members and 800 employees. By grouping together house-wives and giving only one brand per item, this organisation achieved the possibility to demand high quality and low prices from producers.

2-26-17 Miyasaka, Setagaya-ku, Tokyo, Japan.

3.1.3 Workers' Co-op

There are of course many, many co-operatives all around the world, in many different set-ups and with different objectives. One of the more well-known is Mondragon in Spain. It is a "traditional" co-operative, where every labourer is shareholder. Founded in 1956 is has now 34.000 members and owns over 100 co-operations around the city. Is has a turnover of over 4 billion us$ by a profit of over 350.000 US$ (1997).


3.1.4 Farmers' Co-op

For example the Grain Bank in Burkina Faso. Farmers collectively store and sell their grain as to counter the market power of whole-salers. The receipts can be converted into money at the proper time, but can also be used as a means of payment.

3.1... Many more varieties are found all over the world

3.2 Other

3.2.1 Shared Cars

Rather than each household having their own car, one may share a car with many others. One can then participate in a Shared Car Project. Your subscription fee entitles you to make use of one of the collective cars once week, twice a month, three weeks a year, or whatever you wish.

European Car Sharing, Feldstrasse 13 B, 28203 Bremen, Germany, tel +49 716 43742 f ax 49 421 74465.

3.2.2 Pre-sales

Deli dollars: by selling "future meals" at a discount, a restaurant-owner in New York achieved to collect the money he needed to re-model and enhance his restaurant.

Ponypark Slagharen: by selling swimmingpool tickets before building the pool, this dutch businessman achieved to build this theme-park.

This technique has been used in may places.

3.2... Many other creative and inspiring examples can be found.

Recommended reading

"Voor hetzelfde geld" by Henk van Arkel & Guus Peterse, Aktie Strohalm, Utrecht (in Dutch).

Strohalm's new book on Financial Micro Alternatives. To appear december 1998.

"Short Circuit" by Richard Douthwaite, Lilliput Press, Dublin/Green Books, Devon (1996). A German version will be published late 1998, early 1999.

"The Growth Illusion" by Richard Douthwaite, same publishers (1990).

"New Money for Healthy Communities" by Thomas Greco. contact

"Future Wealth" by James Robertson, Cassell Publishers Ltd., London (1989)

"Interest and inflation free money" by Margrit Kennedy, Permaculture Institut, Speyerberg (1988). A revised and enlarged edition was published in German:

"Geld ohne Zinsen und Inflation" by Margrit Kennedy, W. Goldman Verlag, München (1994)

Local Currency Mailgroup:

I N A I S E International Association of Investors in the Social Economy
Rue d'Arlon 40, B-1000 Brussels, Belgium, tel (32-2) 234.57.97, fax (32-2) 234.57.98 e-mail:

What is INAISE ? ... making sense with money ...

The International Association of Investors in the Social Economy (INAISE) is a global network of socially and environmentally orientated financial institutions. INAISE was established in 1989 by seven social investors and currently has over forty social finance organisations as members. Members are based predominately in Europe, but include members from the Americas, Africa and Asia. INAISE members broadly share two of the following characteristics:

- They tend to serve social economy organisations and small or micro enterprises which have social or environmental objectives.

- They finance (de facto) sections of the population, projects, sectors or regions which have been abandoned by traditional banks or financial institutions.

INAISE acts as a hub for this network, facilitating the sharing of information, experiences and common problems to help the development and growth of this social finance sector. INAISE is funded by membership subscriptions and by project work. Major project areas at present include work on the social responsibility of banks and upscaling social investment.

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