Geoff's blog

Innovative currencies

Geoff Mulgan - 16.02.2012

The Innovation in Giving Fund is backing a series of projects using technological platforms to make it easier to give time and money.  Quite a few are supporting new kinds of exchange, including time banks and complementary currencies.

Many of the advocates of projects like these celebrate the fact that they are small scale and independent from government.  But the question raised by many is whether or not they need to become more like money if they're to achieve their goals.

Money is more useful the more things you can buy with it, and it's also more useful if you can be confident it won't suddenly lose its value. Historically money spread because it was guaranteed by states - the more it was underpinned the more sensible it was to keep your savings in money rather than just in land or cattle.  Even when things go disastrously wrong in an economy - like Iceland or Greece - ultimately the state is there to pick up the obligations of the currency, even if it is devalued.

It's possible that the thousands of new currencies springing up around the world can thrive as non-state alternatives to these classic sovereign currencies.  But my hope is that, alongside a series of practical experiments, we can also work with the field to explore whether there are some more structural measures that could improve their impact. Could we design mutual insurance schemes?

Could governments provide some kinds of guarantees for credits in complementary currencies that meet certain criteria? I don't know the answers to these questions, but I'm hoping someone out there does.