A Proposal for Economic
for the People of Wales
problems tend to be left to ‘experts’ but historically, economic expertise
has not provided a monetary framework that creates wealth in a sustainable and
democratic way. Instead the gap
widens not only between rich and poor – on personal, corporate and national
levels - but also between cities and the countryside.
the opposition to financial globalisation increases and in the wake of September
11 we need to ask ourselves how come there is always enough money for war, but
never for health, education, transport and community work?
For Net style explanations of Sept. 11 search for 9/11!
The monetary framework for the creation and
management of national currencies is based on National Debts ever since the
creation of the Bank of England in 1695. Since
that first debt of £1.2 Million, interest on the National Debt is a substantial
share of every annual budget, even though the State has the right to create cash
and coin free from interest. Its
share (M0) of the total money supply (M4) was 21% in 1969 and has gone down to
some 3%. The share of the budget
called PSBR (Public Spending Borrowing Requirement) is thus a necessity that
suits banks who make money out of money, but not tax payers who expect public
expenditure to be financed.
Besides the State borrowing money at interest, the
principle of usury (lending money at interest) is applied in the daily
practice of Western banks. In
Islam, however, riba (Arab for usury) is a capital sin.
The Euro is based on the same principles as Sterling but with even less
State control or Parliamentary accountability.
When asked about the accountability of the European Central Bank by the
Member of a House of Lords’ Select Committee, Monsieur Trichet, the
Governor of the Banque de France said that the PMs are invited every 6
months to attend Council meetings…
The advent of the National Assembly for Wales has
brought a new tier of political democracy to the people of Wales.
But economic democracy would mean the sovereignty to issue
currency, control over the amount of money in circulation and power to increase
challenges of this proposal are thus multi-levelled:
It is necessary to generally raise awareness of the monetary problems
endemic in systems that stem from long before Internet times. The mechanisms of money creation and supply are as little
known and understood as the exponential effect of compounding interest on
It is required to make mental connections between monetary causes and
economic effects. Communities and
the environment are affected globally and debts in bank accounts add to
people’s poverty. Economic
indicators of unemployment, Gross National Product, inflation and interest rates
do not reflect the suicide rates of bankrupts, the deterioration of the
environment or the health of individuals and indebtedness of companies.
The concept of a Currency for Wales is proposed as a solution that is not
only stable and sustainable as a monetary tool but also apt for the development
of sustainable agriculture, public and long-term employment.
The idea implies that a Currency for Wales
Is used only as a medium of
exchange, not traded as a commodity and is thus stable
Is created by mutual credit (i.e.
by transactions between currency users), not as fiat (i.e. issued by an
authority) currency; consequently the currency is inflation-free
and the money supply is unlimited
Is used in parallel with the Euro, not instead of it, and thus
becomes a complementary tool for
trading, especially for the benefit of Small and Medium Enterprises (SMEs)
Is restricted in its usage to the Principality of Wales as a mechanism
for self-governance, self-regulation, economic self-determination and a model
for a Europe of the Regions.
Prof. Bernard Lietaer, former employee of the Central
Bank of Belgium, co-designer of ECU, the forerunner of the Euro and author of The
Future of Money, describes four reasons why the monetary and economic crises
of our times have to be redressed by the creation of parallel or complementary
increasing longevity of people causing costs for pensions and care
revolution caused by information technology creating unemployment with
increasing costs in social security
decreasing quality of environmental conditions requiring sustainability to
extend environmental issues into the monetary domain
monetary instability and currency crises.
information about the future of money as seen by Prof. Lietaer: http://transaction.net
is well known that many elderly people sell their homes to ensure that they are
looked after. It is equally well
known that the next generation has to work for a living and cannot look after
their elders. As a result, the
wealth created by one generation can not be passed on and the wisdom and life
experience of an ageing population is wasted while the working generation has a
hard time making ends meet.
Scandals with pension funds are as much a sign of our
troubled financial times as the loss of value of pension payments.
In addition to costs for caring, health costs are
increasing as the population is living longer.
A Currency for Wales would compensate for the lack of public funds by being
available for the public expenditure of social costs – but only in the
Principality of Wales.
security costs are an increasing part of every budget just as unemployment has
become a fact of life. But LETS
(Local Exchange Trading System) groups are growing world-wide to compensate for
the lack of money on a community level while commercial barter companies do the
same for businesses. These
phenomena would not have arisen if there was enough money around as a medium
address the challenge of rewarding community volunteers because there is not
enough public money to spend.
þ A Currency for Wales would combine the
principles and advantages of these complementary avenues by remunerating
unemployed people and volunteers thus reversing trends towards violence, drugs
The Demand for Sustainability
many young people would love to plant trees to save our environment but can’t
get paid for it? How many rivers
and beaches need cleaning but are not part of public funding programs?
And how many farmers who have lost their animals are expected to be paid
to look after the countryside instead of looking after animals?
How many farmers would like to be supported to ‘go organic’ but
can’t afford to do so under present market conditions?
The imbalance created by big business and
transnational corporations is not in line with the Welsh traditions of healthy
and organic farming and agriculture that would naturally be sustainable if it
was not ‘managed’ by bureaucrats applying financial criteria and influenced
by big business.
A Currency for Wales would compensate for the lack of money in the rural areas
by operating as a tool for trading that also would pay for basic requirements
such as water, energy, telephone and petrol.
Global Monetary Crises - Opportunity for Regions
September 11, demonstrations against financial globalisation began with the
Battle of Seattle and continued in Washington, Melbourne, Prague and Genoa.
The next summit meeting will be held in Qatar and NGOs world-wide are
continuing their campaigning. http://www.worldforumbeirut2001.org/
Awareness of the issues varies from anti-capitalism to cancelling Third
World Debts and sympathy for everybody who has no food and shelter, let alone
Wales can ensure and
model the creation of wealth in rural and urban contexts by introducing a
Currency for Wales. Thus Wales
would show the world how to eliminate flaws of monetary designs and construct
sustainable alternatives. How
Malaysia has done it with her conventional currency is an example of what is
possible for determined politicians when they face persuasive economists and
seductive bankers. See App. 1.
Never Enough Money – neither Public nor Private
Creating New Money is
the report by Prof. Joseph Huber and James Robertson published by the New
Economics Foundation. It suggests how the Government should make use of its
right called ‘seigniorage’ to create money: http://www.neweconomics.org
and calculates how much money could be available for public spending.
fact that there is always enough money for war but never enough for health and
education was already bemoaned by a Labour MP in 1944.
Since then, the rate of financial transactions per day has increased
enormously, but the result is that over 90% of all transactions are part of the
‘financial economy’ rather than the ‘real economy’.
The financial economy is driven by the City
whose raison d’être is to make money out of money. In contrast, Wales is a prime example of the real economy of
land, animals, plants and industries besides people willing to do meaningful
work that contributes to Sustainable Development.
Organised according to the best practices of all
known approaches to community banking and barter currencies, a Currency for
Wales would increase the money available for Public Spending, Business Start-Ups
and Self-Employment and thus contribute to a major economic rejuvenation –
especially in the depressed communities of the Valleys where an increase in the
supply of money would lubricate the willingness of people to trade with each
other and exchange services.
With the introduction of a Currency for Wales for
Public Expenditure, it is paramount to agree that local Municipalities accept
the Currency for local taxes. This
would enable the financing of essential repairs to schools and nurseries.
Similarly, the most acute problems in the National Health Service could
be financed by mutual credit between the Assembly and NHS Trusts in the
Life-long Indebtedness – Personal and Corporate
more one studies the subject of monetary reform with its associated areas of
‘bank victims’ and ‘financial casualties’, the more it becomes clear how
life-long indebtedness begins with student loans, continues with mortgages and
ends up with pensions that continuously decrease in value.
is an increasing number of companies who make money out of checking the bank
accounts of people and companies and who have observed that over 80% of all
company accounts have been overcharged. See
The ‘National Debt syndrome’ is perpetuated by
municipalities being in debt and public expenditure severely curtailed.
In the US, the State and Local Government Economic Empowerment Act HR1452
is proposed so that municipalities are given interest-free loans.
In the UK, the early 90s saw some 50,000 companies go
bankrupt per month. What happened
to all those company directors, their staff and the homes of the wives that
often served to secure company loans? Who
acts on behalf of the young men and farmers who kill themselves because there is
no hope for solving financial problems?
A Currency for Wales
would have ‘credit control’ built in just as commercial barter companies
check that their traders are not taking unduly more than they are giving.
But loans would never be recalled without any notice.
In Islam, banks are supposed to share the risks of companies by taking
equity in the company, not their assets on top of interest payments.
There is not one answer, there is not one cause.
The ABC’s of Financial Capitalism (See App. 2) is an article
that was presented by David Korten, author of When Corporations Rule the
World, to the International Forum for Globalisation in San Francisco.
It is attached as a primer for understanding the problems endemic in a
system that appears to be beyond anybody’s control.
While ‘money’ touches everybody’s life and runs
it to a larger or lesser degree, ‘currency’, ‘money creation’ and
‘money supply’ are a mystery to most. Even
economists don’t know what monetary reformers have known for nearly two
centuries. For the history of
‘social credit’ see http://www.douglassocialcredit.com
In addition to monetary causes,
the working practice of banks also varies between countries: in
Switzerland interest rates are low and stable – just as they used to be in
former East Germany. Banks are
supposed to compete with each other, but banks could also provide a public
service instead of working for the benefit of their shareholders.
JAK is a membership bank that
was created in Denmark thirty years ago and has been a model for community
banking and credit unions.
A Solution for Wales
A Currency for Wales would not only be an
interest-free tool for trading, but also stable because free from inflation.
This is due to the fact that it is not traded as a commodity but
only used as a medium for exchange. Thus
the Currency is not susceptible to currency market prices and the ensuing change
in value, nor subject to varying interest rates.
In this way, a Currency for Wales would be sustainable as a long-term and
Agenda 21 defines Sustainable Development as “the progressive
integration of the economic,
social and environmental issues in the pursuit of development that is economically efficient, socially equitable and responsible
and environmentally sound”.
Hazel Henderson http://www.hazelhenderson.com/
has published Economics in the Solar Age and is well known for her
Quality of Life Indicators that take health and the environment into account.
Her principles have been applied by a team of
academics at the Welsh Institute of Rural Studies within the University of Wales
Aberystwyth (See Monitoring Sustainable Development in Wales: a Pilot Index
of Sustainable Economic Welfare by Peter Midmore, Jon Mathhews and Michael
Christie, January 2000).
A Currency for Wales
would not only be sustainable because it would be interest- and inflation-free,
but also a highly efficient economic mechanism. Furthermore, its effects could also be measured by indicators
that take sustainability into account.
Economic Results of a Currency for Wales
The concept of a Currency for Wales is designed to:
reflect the wealth intrinsic in the
people and the country of Wales even though some are categorised as
‘deprived’ under the present system
encourage people in Wales to trade
with each other
reward community work for which
there are no public funds
pay unemployed people to work on
provide additional purchasing power
to buy local produce
act as a model currency and stable tool for trading.
creation of wealth as a result of public work would be measured as much as the
decrease of poverty, indebtedness, illness, suicides, divorces, pollution,
unemployment and social costs. Just
as LETS and Time Banks have the power to unleash hidden talents in the
community, a Currency for Wales would unleash an economic potential hitherto not
National Assembly’s Agenda, edited by John Osmond, says that “…In fact,
over 40% of the overseas enterprise in Wales are owned by American firms. And
employment in overseas owned manufacturing plants in Wales only accounts for 5%
of Welsh employment. … There is an acknowledged reluctance for small and
medium enterprises to export…”
reluctance to export is a sign of natural sustainability, i.e. local produce and
products serves local people, without burdening the environment with the effects
The economic effects of
a Currency for Wales would not be measured in terms of import/export and foreign
investment, for the whole purpose of the Currency for Wales is to increase its
circulation region-wide and not to respond to international capital that
comes to make money and goes as soon as such chances diminish.
Monetary Benefits of a Currency for Wales
principles in the creation and management of a Currency for Wales would
reinforce Sustainable Development more effectively than any other measure taken
within the current limitations of public funds, be they in Sterling or in Euro.
Page 133 of the National Assembly Agenda says:
Sustainable Development is supposed to embrace three
to improve the quality of life…
to ensure the health of the processes that maintain the long term stability of
management of our heritage… to enrich our own and future generations.
A Currency for Wales would have the long-term stability expected by Sustainable
Development and would eliminate those principles that have been found to be
limiting and restrictive while enacting those that have been found to be
liberating and increasing economic productivity.
implementing a Currency for Wales, a lot of thought has to be given not only to
the idea and concept but also to the launch and introduction and the day-to-day
This might include competitions
to tender for this public service as a Public / Private Partnership
Card companies to tender for the most suitable technologies similar to
the MONDEX experiment which was backed by five banks and £40 million.
In response to those
who suggest that the Assembly is not doing enough with its powers, the creation
of a Regional Currency as a territorially limited, non-tradable currency would
strengthen the Assembly’s ability to deliver Anti-Poverty Strategies, Rural
Development Plans and Sustainable Development.
commercial barter currencies create their ‘trade pounds’ as a parallel
currency that is limited to its membership, every transaction is taxed as if it
was paid for in Sterling, even though the purchasing power is obviously not the
As long as Wales is considered ‘deprived’ and
thus eligible for European grants, it appears illogical to treat a Currency for
Wales as taxable tender, since it would be valid only in the Principality of
For Whitehall to decide that the People of Wales cannot
do what their elected Assembly votes to do in terms of economic
self-determination as a mechanism for devolution would hardly be tenable.
For Europe and Parallel to the Euro
Tourists are used to changing currency.
Sterling (or Euro) could be changed into Currency for Wales by the
‘Public Services Bank of Wales’ in the same way.
However, traders would have the freedom to accept 100% Welsh, 100%
Sterling or any mixture.
The goal is to give the
people of Wales tools for trading among themselves while they can use Sterling
(or Euro) for trading with the external world.
Between London and Brussels
Nation States lose their financial power, a Europe of the Regions does not have
regional monetary bases. Meanwhile,
Wales is financially and thus economically dependent on both London and
As a tool for
self-determination, the Currency for Wales would add a degree of freedom
Taxes for which Coffers?
LETS currencies are currently ignored by the Tax
Authorities. In Australia, a law
was passed to ensure that people who receive social benefits are not penalised.
Similar recommendations were made in the UK.
Commercial barter companies, however, need to treat
their currencies as if they were Sterling, even though they do not have the same
ATTAC - Association for the Taxation of
Financial Transaction in Aid of Citizens –was created as
a French Coalition after the article Disarm the Markets appeared in Le
Monde Diplomatique in 1998. Appendix
3 shows the Platform Statement that was signed by the founding members.
Now the coalition is represented in 26 countries.
ATTAC is promoting the Tobin Tax, named after an
American economist who suggested this tax already thirty years ago.
The Tobin Tax is now being discussed by the French and German governments
as well as in Brussels. After having been promoted most actively by War on Want and
the World Development Movement in the UK, ATTAC UK will be launched on
November 17th 2001.
A Currency for Wales would ensure that local taxes
can be paid in Currency for Wales while national taxes continue to be paid in
Sterling or Euro.
Funding from Europe
In the spirit of a Europe of the Regions and given
the eligibility of areas of Wales for European funding, it would appear natural
to be able to attract funds for CurrencyWales.com from Brussels.
As this requires European partners, it would be
strategic to select manufacturing plants that demonstrate excellence in terms of
Sustainable Development such as solar panels from Germany and recycled paper
Instead of trying to attract foreign investment, it
is recommended to ‘import’ European know-how for creating manufacturing
plants that put Sustainable Development into practice.
A Currency for Wales Project would outline not only
the creation of manufacturing plants but also how employers use Currency for
Wales to reward employees and to put Currency for Wales into local circulation.
Historic precedence for local currencies abounds in
the UK, e.g. the Druid Penny issued by the Anglesey Copper Co. in 1787
and the Merthyr Silver Token in 1811.
Since the 1960s Cardiff has grown in importance as a financial centre and
since the move of the Royal Mint to Llantrisant in 1968 Wales has produced coins
not only for the whole of Britain but also for many other countries.
For example by the financial year 1981/2 the Royal
Mint was producing coins for no fewer than 57 overseas countries.
Embedded in the concept of Global Citizenship and a Europe of the
Regions, a Currency for Wales could extend the use of local notes by using Smart
The MONDEX technology for an electronic purse that
was tested in Swindon has already been modified such that it can be used for
‘barter currencies’ such as the Currency for Wales would be.
It consists of a reader device that looks like a flat mobile phone for
traders and an ordinary smart card for traders.
In Belgium it is customary to pay for petrol with smart cards – albeit
with conventional currency.
Appendix 4 shows the current state of the art of
using simple tools and sophisticated technologies for the purpose of
administering trading balances between the users of barter currencies.
While LETS began with printing cheque books, a
‘Tauschring’ (circle of exchange) in former East Germany introduced a
‘mutual recording booklet’ that has now been introduced in Hillingdon near
London. The founder of LETS who
lives in Canada is introducing http://www.OpenMoney.org
on the web with server software that allows for a multiplicity of barter
Meanwhile a Tauschring in Austria is working on a
clearinghouse for complementary currencies that uses time as the internal
accountancy unit on the web. This
allows for intertrading between members who use different currencies in the same
way as the Bank for International Settlements in Basel allows for exchanging
different national currencies.
The Currency for Wales Project would draw on the
experiences gained from eight years of South Powys LETS and its technologies.
Possible Public Projects
The idea for a Currency for Wales is profoundly
‘public’, i.e. it is meant to be run as a public service, to fund public
services and to generally ‘lubricate’ the trade of products and exchange of
services in the Principality of Wales.
With that intention in mind, it would be most
strategic to ensure the support of
authorities to accept taxes in Currency for Wales
water, electricity and telephone
companies to be paid in Currency for Wales – possibly in part
groups from the private, voluntary and community sector to be funded by Currency
Global Perspectives in Adult Education
The Workers Education Association in Wales has
launched a Global Perspectives project with a conference on October 19th
It offers people knowledge and skills by drawing lessons from across the
world on labour and human rights, trade, debt, literacy campaigns, and local
responses to global environmental problems.
Its Project Partners and Supporters are the Wales
Development Education Umbrella Group, the Department for International
Development, the National Organisation for Adult Learning and the City and
County of Swansea.
The conference organiser is familiar with LETS and
the Tobin Tax and would gladly co-operate on the Currency for Wales project.
Recycling Paper with ‘Sustainable Wales’
This charity seeks to integrate environmental, social
and cultural concerns in the spirit of Agenda 21.
With this remit it has focussed on making recycled paper a priority and
would gladly ensure that Wales gets a manufacturing plant set up – following
the experiences of its Danish suppliers.
This proposal would be fully in line with the
Assembly’s recent draft Waste Strategy.
Rewarding Volunteers with ‘Groundwork Trust’
Groundwork Trust is already involved in a Community
Café with Internet facilities where Hillingdon Pounds and Cuppa
vouches compensate for the lack of money in a deprived area.
A proposal is currently under consideration for the use of interest-free
time based currency to attract more volunteers to environmental projects in the
The Currency for Wales project should draw on these
experiences at the design stage.
Remunerating Women Volunteers
The Currency for Wales project has been fostered by
women who are supposed to shy away from money, power, politics and economics.
The Wales Assembly for Women, the Women’s International League for
Peace and Freedom and Women’s Aid would be women’s organisations who would
be open for co-operation due to the long-standing relationships already
Circulating Currency with the BodyShop
As a patron of Time Banks UK, Anita Roddick has
recently spoken very supportively at a TimeBanks conference and it would
therefore seem possible to ensure that all BodyShops in Wales would accept
Currency for Wales.
Currency for Wales is a ‘barter currency’ that
facilitates exchanges at all levels: business, voluntary and statutory.
It is only valid in the Principality of Wales and complements Sterling
(or Euro) at a 1 : 1 exchange rate.
Considerations for Implementation
An interest-free currency could become for Wales what
blood is for the individual: an essential medium that circulates to every organ
of the body politic and so benefits all sectors: public, private, voluntary and
community. The funding methods
differ between the sectors and vary from public funding to venture capital,
shares and loans to non-repayable grants.
The introduction and management of an interest- and
inflation-free currency would have to take into account the following
set up by the Assembly requires public funding in Sterling.
Accountability to the Assembly of Wales
Council with equal representation from the public, private, voluntary and
Board with expertise in monetary analysis, barter solutions, banking
practices and computer technologies to ensure best practice
promote, oversee and monitor implementation, practice, results and effects in
terms of Sustainable Development.
Bank would be selected through a tendering process and would be appointed to
deliver a public service at specific PR terms and financial conditions.
holders and Smart
Card traders whose mutual credit transactions are analysed and evaluated for
frequency and volume of trading.
supply with Currency for Wales requires evaluation and monitoring.
In summary, just as the setting up of an Assembly for
Wales was an innovative step into uncharted territories, so does the creation of
a Currency for Wales offer an unknown potential.
Instead of providing short-term finance for maximum returns in a climate
of scarcity, a Currency for Wales offers funding for
Economics through long-term economic mechanisms for stability
expenditure through a careful portfolio of European, UK and self-created funds
business through interest-free loans
activities through balancing Sterling (or Euro) with Currency for Wales
and community activities through virtually unlimited ways of rewarding
How Malaysia got away with IMF Heresy
– Margaret Legum, South Africa New Economics
The ABCs of Financial Capitalism –
David Korten, People-Centred Development Forum, USA
Platform Statement – ATTAC –
Association for the Taxation of Financial Transaction in Aid of Citizens
Platforms for Interest-Free Currencies – Compiled by Sabine Kurjo McNeill
The Growth Illusion - How economic growth
has enriched the few, impoverished the many and endangered the planet
Chossudovsky - The
Globalisation of Poverty - Impacts of IMF and World Bank Reforms.
Kennedy - Interest
and Inflation-Free Money – An
exchange medium that works for everybody and protects the earth
Rowbotham - The
Grip of Death - A study of modern money, debt slavery and destructive
Lietaer - The
Future of Money - a new way to create wealth, work and a wiser world
Chief Economic Advisor to the Secretary of State for Wales – A History of
on http://intraforum.net/money - the
site that includes the Forum for Stable Currencies with regular meetings
at the House of Lords since 1998.