06 February 2000
A WELSH POUND?
Considerations and Recommendations
Professor Bernard Lietaer as the designer of the European Currency Unit is
one of the experts on complementary currencies. He suggests that unemployment,
destruction of the environment currency crises and social problems can best be
addressed by currencies that have fundamental differences to national currencies
as current legal tender.
of the Creation of the Welsh Pound
The concept of a Welsh Pound is designed to solve the following
provide matched funding for
the amount offered by the EC
reward voluntary community
work for which there are no public funds
enable the payment of
provide additional purchasing
power to buy local produce
act as a model
currency and stable medium of exchange.
The paper describes the tension between politics and economics as it has
been created by the mechanism of National Debts
and interest on national
currencies. Paragraph 33 of Local Agenda 21 asks for creative financial
mechanisms. Given the commitment of the Welsh Assembly to Sustainable
Development, it is recommended that the Welsh Pound be introduced as soon as
possible and with the maximum support of significant institutions, such as
banks, Job Centres and supermarkets.
Questions that need to be
Discussed on the level of Welsh Politics:
Does the Welsh Pound serve as an exchange medium only like a Green
Dollar in a LET System or should the functions of lending and saving also be
If the second is true, then how is this legal tender money put
into circulation? By public works projects through central or local government
agencies? Through giving private interest free loans?
What are the conditions in terms of administrative fees?
Insurance for the loan? Payback time? Demurrage fee?
Is the Welsh Pound accepted by the government for payment of
Does the money have any backing in the form of government real
estate e.g. historic buildings which would create the need for the demurrage fee
to cover maintenance costs?
The balance between political
democracy through voting and economic
democracy through monetary
transactions has not been on the agenda of politicians or the media so
far. However, the opportunity for matched funding from Europe shows not only the
financial deprivation of Wales but also the weakness of the management of
Sterling by the UK Government.
The Forum for Stable Currencies has
access to a wide network of experts who have studied the political and economic
implications of currency issued as a National Debt. With a view to EURO
perpetuating that devastating mechanism, it is recommended that the Welsh
Assembly adopts the Welsh Pound as a currency
that is complementary to the Pound
The purpose is to demonstrate in a small scale how a currency can be made
stable rather than inflationary and fulfil its main function, to act as a medium
of exchange between traders. Instead,
it has become a commodity of brokers and financial institutions as well as the
mechanism for passive income for shareholders.
If proven successful, the Welsh Pound can act as pilot project for the
Commonwealth of 54 Nations.
In this context, it may be important to note that the Dubai
Department of Ports and Customs relaunched the traditional Golden Dinar and
Silver Dirham as complementary legal tender on March 23, 1999. For the current
way of dealing with national currencies undermines the value of domestic
The Islamic example shows that the value
of the currency lies in the preciousness of the metal used. Although all
spiritual traditions forbid the lending money at interest, also called usury,
as the means for social erosion, Islam considers it the highest sin against God
Local Exchange Trade Systems, in short LETS, and commercial Barter
companies show how the recording
of the value of a
transaction between people and companies becomes a Trade Pound only
among the registered members of an organisation though.
The history of former East Germany has shown how a currency could be
introduced and withdrawn. Its stability was created partly through low interest
rates which were the same for borrowing and for saving. Consequently, it
achieved very high economic security: virtually
zero unemployment and hardly any violence.
In Wales, suicides of farmers and unemployed young men are the desperate
cry for help and change that can not possibly be overheard.
For the Welsh Pound to become effective, two levels need to be considered:
its creation through the Welsh
Assembly and its distribution through
banks and companies to individuals.
Creation or Recording
The creation or issuing of
currency has been the monopoly of Central
Banks. As a debt, charged with 8%
interest, the founder of the Bank of England gave £1.2 million to the King
in 1694 to fight France so that soldiers could be paid. This model has been
copied world-wide with the consequence that today the whole world is in debt,
continuously paying interest a modern form of slavery. For the real assets
such as land, food and buildings end up being controlled by the recipients of
interest payments. In 1944 Norman Smith MP said that there is always enough
money for war, but never enough for education and health. This pattern continues
to be true today.
When creating a currency,
it needs to be backed by a credible
authority to ensure its purchasing power and value as legal tender.
Unfortunately, the authority of Governments has been undermined
substantially on one hand by the power of capital, on the other hand by the
legalised practice of banks as the principal mechanism for creating money via
However, Governments do have the power to create notes and coins, also
called M0. In practice, the amount of money in circulation as cash has gone down
from 21% to 3% since 1960.
the value of transactions,
simple mechanisms need to be in place:
books as they are used by LETS groups
card slips as they are used by
credit carnets in use by LETS
groups in former East Germany or
cards as an extension of the MONDEX trial for an electronic purse or the
EC card in Belgium.
The mechanism of recording is either anonymous or arranged by a central
agency or agreed between trading partners. Given the high degree of alienation
that has been achieved by our current monetary system, it is desirable to boost
Welsh morale and prosperity by facilitating transactions as much as possible.
Facilitation requires the gathering of information for the purpose of passing it
on to the right recipients.
the most successful barter company established in seven countries. Their
experience shows that good facilitation requires a broker who ensure that
companies get what they need in terms of skills from unemployed people, or
products and services from other companies.
In the same manner, co-ordinators are required for 80 - 100 unemployed
people in Job Centres where CV, skills and profiles could also be published on
websites. This could become part of a Training Course in basic Internet skills
paid in Welsh Pounds!
For Wales to become economically independent of London and Brussels while
combining the advantages of information technology with a rural environment, it
is vital that the Welsh Pound becomes additional oil in the machinery.
Likewise, it is vital that Internet literacy is as high as possible, given the
competitiveness that current currency management requires.
Distribution and Carriers
With a view to establishing the Welsh Pound as a stable and model
currency, the following means of distribution that are currently in use for
Sterling need to be matched in their ease of use:
notes and coins
bank accounts and cheque
credit and debit cards.
In the end, money is a set of numbers as information
that needs to be carried by metal, paper
or plastic. Plastic is used by credit cards with a magnetic strip and
in casinos as chips.
Cash and chips are the easiest
up to a certain amount.
Cheques solve that problem but
require labour extensive recording and administration.
Credit cards require matching
Given the development of information technology, it would seem advisable
to make best possible use of future oriented mechanisms.
The Internet as an add-on to computer technology is the most promising
vehicle. At the same time, the experience of LETS as well as Bartercard shows
that it is paramount to facilitate transactions between people for the purpose
of recording their value.
Plastic Money in
Credit Card Size
The A4 page has set a standard for textual information. The credit card
has set a standard for financial information and business cards. For maximising
ease of handling and durability, it therefore seems convenient to match notes
and coins with plastic cards in the size of credit cards. For security reasons,
they could be numbered just as credit cards.
Consortium of Banks
With the Welsh Dragon, printed by the Bank of Wales with the approval of
the Welsh Assembly, plastic cards could provide the start-up mechanism for
Just as Scottish banks printed their individual logo on their legal
tender, so a consortium of banks could be created who would support the Welsh
Pound as stable currency in addition to
Sterling. Their logo on a plastic card would add credence and the support
necessary to the Welsh Dragon.
This simple mechanism removes the centralised administration of cheques
from banks and enables people to do their own accounting. By keeping track of
the value of every transaction and countersigning
by the trading partner, the carnet contains headings such as these:
This Carnet could be issued by Job Centres and thus enable unemployed
people to do occasional or part time work that may lead to full time employment
for Welsh Pounds.
The Carnet should also be obtainable from Banks and Post Offices or
Newsagents. Public Internet facilities would be another pick up point. The
emphasis in on self-help and self-organisation. An East German model is
available upon request.
Smart Cards with Dual Currencies
Assuming that at least one bank or credit card company backs the idea of a
stable Welsh Pound as complementary and interest-free currency, the technology
of their card should be extended to include the Welsh Pound as a second
The MONDEX example carried out by five banks in Swindon allows for five
currencies none of them were interest-free and thus stable though.
However, to agree on the kind of card and all the logos is a minor
technical detail. It is much more important for politicians to acknowledge that
neither Sterling nor EURO can
continue business as usual if Sustainable Development has any meaning whatsoever
the devastating gap between
country and city has been created by money in its current management
the Welsh Pound as outlined
above would provide a solution on a significant number levels.