Greeks can withdraw just €60 a day (Image: AP Photo/PA/Thanassis Stavrakis)
As the cash dries up in Greece, how can economic paralysis be averted? Innovative parallel currencies offer one way to tackle the crisis, says the author of Healing Capitalism
Whatever your views on the causes of the Greek crisis, its citizens made a brave decision to reject more imposed austerity in yesterday’s referendum. Brave, because in the run-up to the vote the country’s banking system froze after the European Central Bank stopped giving it emergency loans.
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Greeks are allowed to withdraw just €60 a day and there are fears the banks may run out of cash within days.
As politicians and bureaucrats argue over the way forward, businesses and citizens face a more immediate concern: how to keep trading if money in circulation continues to be restricted or to decline, especially with many credit cards not working.
Many businesses and communities have already been taking matters into their own hands. Since the crisis started in 2009, Greeks in many cities have enrolled in systems that allow them to trade products and services without money, using a metric called a TEM – the acronym is from the Greek for “local alternative unit”.
TEM credits
These systems were launched by volunteers. One TEM is equivalent to €1, but it can only be spent with other participants, and these currencies are only suitable for products and services provided within Greece, not from abroad.
These currencies are local coping mechanisms rather than nationwide systems. Yet there are many options for government-backed alternative currencies to complement the euro.
The Greek government dabbled in self-issued currencies in 2010 when it paid medical suppliers with IOUs or “pharma-bonds”, which could be used as deposits in the country’s banks. Given the referendum result and the continuing disruption in banking services, the government needs to resurrect such ideas on a larger scale.
One of the best suggestions being considered by some officials is a euro-IOU, which would be used to pay part of public sector wages and pensions. It would be accepted for the payment of taxes, in the same way euros would. While they wouldn’t be exchangeable for real euros, the IOUs could be used for trade within Greece, freeing up more euros to make payments on debts and foreign goods. In this way, these “tax anticipation notes” would circulate in the wider economy until people decided to redeem them when settling a tax bill.
Pay by Twitter
This alternative currency, which I’ll dub the Greco, could be issued electronically, and payments enabled from computers, SMS messages or even using Twitter addresses – already does this for payments in the digital currency bitcoin. Issued at scale, Grecos could help ease the pain of austerity and keep Greece in the Eurozone.
Although people are focused on what to do in Greece and the Eurozone now, the implications are far wider, inviting all of us to think about the kind of monetary systems we want as we seek to transition to a fairer, more sustainable world.
Experts speak of the Greek economy having shrunk by 25 per cent since 2008, yet by other measures the nation’s wealth is constant – its people, skills, buildings, land and culture are the same. It is only the means to trade that has shrunk – the supply of euros.
The current crisis reflects the wider problems many nations face with a system in which banks pretty much dictate the supply of money, and goes to the heart of the debate over what money actually is. Solutions likely lie in the ingenuity of citizens and entrepreneurs in creating their own currencies. Governments will finally come on board when sufficient numbers of people and businesses participate in such systems.
Once the Greek government joins its citizens and entrepreneurs in creating alternative currencies that can exist alongside the euro, we will see the emergence of truly multi-currency societies. As the birthplace of money – with the drachma over 2500 years ago – it would be apt for Greece to lead the way into this future.
