The UNO A Model Complementary Currency Used to Reduce Poverty & Help Build Healthy Local Economies Michael Sauvante Vari MacNeil National Commonwealth Group, Inc. a Delaware 501(c)(3) non-profit corporation This document explores a topic introduced in a companion document titled Commonwealth Development Organizations (CDOs), which describes a more complete financial ecosystem of which this concept is a part. It can be found at: https://commonwealthgroup.net/doc/CommonwealthDevelopmentOrganizations.pdf Table of Contents 01 02 03 Overview What is Money? The UNO p4 p8 p12 Overview Definition of Money Distinguishing Features p8 p14 Bank-created Money Fractional Transactions p10 p14 Government-created Money UNO Bank p10 p15 Public and Non-profit Recruiting Participants Bank-created Money p15 p11 Linked to Cost of Living Citizen-created Money p16 Preventing Inflation 2 | The UNO: A new complementary currency National Commonwealth Group 04 05 06 The UNO in Practice Technology Benefits of the UNO System p17 p20 Local Circulation Server Side p22 Benefits Chart p17 p21 Small Businesses Client Side Appendix A p18 p21 Public Works Widespread Adoption p23 A Basic Income Primer p18 Remittances Appendix B p19 p27 Conversion to a National Complementary Currencies Currency Endnotes p34 National Commonwealth Group The UNO: A new complementary currency | 3 01 Overview Economic disparity - - is greater than at In 2002, C.K. Prahalad and Stu Treating the BoP as producers - any time in recent art Hart suggested that a for shows somewhat more promise, human history. tune could be made in serving but this approach faces huge chal the needs of the poor and in the4 lenges, including producers’ poor process coined the term BoP. linkages to buyers, sellers and Unfortunately their vision to other producers, and very limited6 align corporate self-interest with ability to take on economic risk. Four out five people live improving the poor’s standard Borrowing doesn’t really move the on the equivalent of1 $10 of living has proven elusive. The global economy, for the most part, needle either. Microfinance, once USD or less per day, held out as the rescue mechanism remains outside the grasp of the- - largely left out of the for the7 poor in the developing BoP, and attempts to integrate the- global economy. poor, whether as potential con world, is proving to be inade quate. Long-term studies reveal- That is even more true for the sumers or as producers, have fall en well short of desired outcomes. little difference in living standards more than 50% who live on the between communities with avail equivalent of $5 USD or less a 2 Treating the poor as consumers- able micro-lending and control day. This group, often called 3 has left the corporate landscape communites. - the base of the pyramid (BoP), littered with high profile disap can be dividedLow income into three strata.- pointments due largely to the To participate in the global econ omy, whether in the developed or inability of sellers to reduce costs- 1. : approx developing world, one has to start imately 1.4 billion people who and prices enough to scale to with certain minimum assets and- struggleSubsistence to live on $3-$5 a day.- profitability when each consum er makes a tiny purchase. Even financial resources. The BoP does 2. : approxi deep-pocketed multinationals not have those assets and there mately 1.6 billion people who like Hewlett Packard, Procter & fore cannot get a foothold on the economic ladder. barely subsistExtreme on poverty$1-$3 a day.: Gamble, SC Johnson and DuPont5 have either shut down projects or 3. transferred them to non-profits. approximately 1 billion people who receive less than $1 a day. 4 | The UNO: A new complementary currency National Commonwealth Group Fig. 1 The global economy shared by The Income Pyramid the top 20% of income earners. $10+/day> $10/ day 80% of people earn the equivalent of Less$3-5/day than $10/day $10/day or less. $3-5/day 1.6 billion Base of the Pyramid 50% of humanity does not participate in the $1-3/day 1.4 billion global economy & survives on less < $1/day 1 billion than $5/day. 1. Basic income grants • There is no negative effect on Income inequality in developed labor supply – recipients do not countries has created much the - work less. Only one concept has been proven same hurdle. People born into - • Households make good use of to eliminate poverty, and do8 so ever-expanding pockets of pover the money. ty, poorly educated and stuck in rapidly, every time it has been im • Poverty decreases. low-wage service jobs, are unable plemented — basic income. (See to lift themselves off the bottom Appendix A for a basic income • Long-term benefits in income, rung and build better lives for primer.) health, and tax income are re- - markable. themselves and their children. Basic income is the idea that all • The programs save money. So the question is, how do we get citizens should be gifted a month money in the hands of the poor ly income sufficient to cover their- when the current financial system basics needs. It goes by various does not work for them? When it names, including uncondition takes money to get money? And al basic income, basic income - Basic income experiments have how do we then consolidate those guarantee, universal basic income, largely focused on grants of individual gains to create healthy social credit, social dividend, cit national currency and thus have izen’s income or most commonly, local economies and sustainable faced an uphill battle to gain - communities?A two-pronged approach basic income. legitimacy and acceptance, not to Not surprisingly, there is a popular mention severe structural chal misconception that a guaranteed lenges. Elected officials assume- - that such programs will require We answer those questions by basic income will just make the- combining two approaches that recipients lazy. In fact, the oppo new taxes, anathema to politi have each proven to work in site is true. Evidence is accumu cians everywhere. And they are slow to realize that implementing alleviating poverty and in building lating that free money,9 as Dutch and maintaining robust, inclusive writer Rutger Bregman notes in basic income could well replace local economies. the Washington Post, has several programs like welfare, housing advantages: National Commonwealth Group The UNO: A new complementary currency | 5 assistance, food stamps and Complementary currencies do not Ithaca HOURS and other time- unemployment compensation replace national currencies, but • basedSpent currencies. that require complex and costly rather complement them. Users- administration, eligibility review need only agree to accept those into circulation as a and oversight. alternative currencies as a me credit obligation: LETS, WIR, dium of exchange for goods and mutual credit clearing systems Nonetheless, where basic income- services in addition to the money like CES in Africa. programs have overcome these they normally use. Programs such as airline miles obstacles, the results are com and similar loyalty programs are pelling. Thus we have concluded A complementary currency then also generally grouped under that some form of a basic income is an agreement to use something the umbrella of complementary program is essential to reducing other than national legal tender - currencies.12 poverty. as a medium of exchange. (See Appendix B for more on comple But can a basic income program mentaryTypes of currencies.) complementary be implemented in a way that gets currencies around the problems associated - with using national currency? We - Airline miles are one of the believe it can — by introducing a fastest-growing subsets of com second approach to produce an There are two forms of comple plementary currencies. Indeed, mentary currencies — one that integrated solution. by 2005, it was estimated that the - resembles conventional money value of air miles in circulation far We propose to simply make (paper or digital) and the other in surpassed that of any other nation unconditional basic income the form of time tracking or credit. alMeeting currency. multiple goals grants to recipients using a 10 Complementary currencies in the - complementary currency. form of money can be issued in three• Sold ways: for cash: Toronto Dol- Complementary currencies areIn of ten used to link unmet needs13 with 2. Complementary currencies otherwise unused resources.- lars, Berkshares, Brixton every community there are things • Pounds,Distributed Bristol Pounds. that need to be done and peo ple willing to do them. All that’s Complementary11 currencies have with no formal missing is the medium to connect a long history of creating strong, obligation to reciprocate: the two. stable economies that make full use of local productive capacity. Complementary currencies are so named because they function in “Adopting a diversity of currencies is just as important to parallel with conventional money. human survival as biodiversity is to the fate of the earth.”14 —Bernard Lietaer 6 | The UNO: A new complementary currency National Commonwealth Group - - - Therefore, the more money, i.e., • By giving a grant, we circum Thus, it currently better fits devel medium of exchange, there is in vent barriers implicit in condi oping economies. local circulation, the less unused tional government programs like To implement this strategy, productive capacity and therefore those mentioned above. We also we are introducing the UNO, the better off everyone is. remove any incentive for fraud a new model complementary - and corruption in participation- Beyond its ability to protect or and administration. And we allow currency that can be used to stimulate a local economy, a com recipients to decide for them provide a basic income to its plementary currency can be used selves how to use the money. - to pursue social or environmental users anywhere in the world.