The UNO A Model Complementary Used to Reduce & Help Build Healthy Local

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 ? 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

2 | The UNO: A new 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 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, . 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- 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 , 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, , 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 notes in basic income could well replace local economies. the Washington Post, has several programs like , housing advantages:

National Commonwealth Group The UNO: A new complementary currency | 5 assistance, food stamps and Complementary currencies do not and other time- 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 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 - currencies.12 poverty. as a . (See Appendix B for more on comple But can a basic income program Typesmentary 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, every community there are things • Pounds,Distributed 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 —

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. objectives. - • By making the grant in a com plementary instead of a national And although complementary cur currency, we remove many of the rencies are often local in nature, real and perceived constraints - - The UNO is designed to alleviate they can be used within virtual and obstacles associated with the - the ravages of poverty and there communities globally, promoting use of national currencies, includ by the suffering of the BoP, one re fuller utilization of resources over ing the assumed necessity to tax gion at a time, and also serve as a a much wider geographic area. or deficit spend to fund such a - catalyst for creating healthy local program, reliance on donations or And like basic income, they have - economies that provide opportu other contribution, and more. been shown to also significantly nities for citizens, and ultimately reduce poverty, depending on im • By coupling a basic grant nations, in both the developing plementationCombining and two circumstances. proven - methods program with a complementary and developed world. currency, we get the best of both We based our approach on evi worlds. dence from studies conducted on By combining basic income with • This combination is best basic income programs around - a complementary currency, we applied where there is very little the world, described in greater address both poverty elimination national . detail in Appendix Aand on com and the building of healthy local plementary currency programs, 30K 10% economies. exploredTo understand in Appendix B. the Fig. 2 Linking Unmet Needs with Unused Resources

In Rosenheim, Germany, un- 0 0% employment inversely tracks deployment of 2003 2012 complementary currency, decreasing as use of currency Chiemgauer Jobless 15 increases. Conversions Rate

National Commonwealth Group The UNO: A new complementary currency | 7 02

Currency Sources

hurdles implicit in money? Where does it - 17 basic income proj- come from? And how (nowadays called fiat currencies ) ects tied to national does the source of and others that are non-govern ment, citizen sponsored systems, currencies and why money help or hinder usually called complementary a complementary our goal of poverty Bank-createdcurrencies. Money currency like the elimination?” UNO overcomes Definition of Money Contrary to popular belief, the those barriers, we vast majority of national That meanscurrency begin by asking, today comes from18 private banks, “What exactly is Wikipedia summarizes money - not governments. as “any item or verifiable record every bank from the smallest that is generally accepted as pay- community bank to the largest ment for goods and services and banksbank on Wall Street contributes- repayment of debts in a partic to money19 creation. Some central ular country or socio-economic are owned by their na context, or is easily converted to tional governments and some are such a form. The main functions a public/private mix, but they do of money are distinguished as: not account for the direct injection a medium of exchange; a unit of of the majority of the money in account; a ; and, circulation, but rather support the sometimes, a standard of deferred other banks. banks payment. Any item or verifiable And, as acknowledged20,21, recently 22 by record that fulfills these functions16 the , can be considered money.” do not lend depositors’ money as Units of exchange that fit this commonly believed, but rather definition have been around for create the money they lend with millennia, often in two parallel a simple accounting maneuver forms – those that we would call when they approve a loan. Banks a national currency, authorized use the borrower’s own assets as and/or backed by a government the guarantee for this brand new money. 8 | The UNO: A new complementary currency National Commonwealth Group This means that the for-profit - close out that loan (i.e., seize the Their rationale is that when the financial industry has succeeded collateral that was pledged with economy is faltering, their risk in capturing the creation and con the loan). Thus the banks either as lenders goes up and therefore trol of the majority of the world’s - make money on the money they they want to limit their exposure. money supply, manifested in the created out of thin air (interest Conversely they loosen up the form of national currencies. Bank on the loans), or acquire assets purse strings when the economy ers, going back several hundred in exchange for wiping out that is running hot. The net result is years, persuaded governments magically created money. - that society is deprived of the very to let them create the money that thing it needs when things get drives our economies. In essence Another problem with bank-cre tough and has more than it needs they privatized the money supply. ated money is that its creation when things are good. and withdrawal from circulation One problem fundamental to this normally runs counter-cyclically We find that the only banks that system is that each time a bank to what the economy needs, i.e., prioritize lending in concert with creates the money for a loan, it when the economy is slowing Sparkassensociety’s needs23 are non-profit does not create the money to down and more money needs to owned banks like the German cover the interest. This means that be circulating to rev it up, banks or government - ultimately somebody will not have cut back on lending. owned banks like24 the Bank of the necessary funds to fully pay North Dakota, the only govern back their loans. At that point the ment-owned bank in the United bank turns to asset confiscation to States. These support healthy,

Fig. 3 Private Banking with Interest25

Step 1: A bank creates a loan of $100, Bank increasing the money supply by $100. When the loan is repaid at 10% in- terest, the money supply is reduced Loan Principal + by $100, plus an additional $10 Interest Repaid (because the money to pay the Loan Principal interest is never created), which -$100 + $100 -$100 + $100 becomes property of the bank. -$10 +$10 Money Supply Loan Principal + Step 2: The bank leverages Loan Principal Interest Repaid its $10 in interest income to loan $110 dollars and the cycle -$110 + $110 -$110 + $110 begins again. After each cycle, -$11 +$11 the money supply is reduced by an ever-increasing amount, which represents the growing private ownership over the money supply.

National Commonwealth Group The UNO: A new complementary currency | 9 thriving economies while most Paradoxically, central banks like- head programs like welfare, food of the rest of the world suffers the Federal Reserve create the stamps, through boom and bust cycles, - money they lend to the govern and pension plans to be able to dependent on private banks that- ments based on the government’s replace them with a basic income prioritize profit for their share own creditworthiness, which program — without having to holders ahead of what the econo should be the same justification raise taxes. my needs. for the government issuing its - Unfortunately, most elected Instead of trying to work own money without having to borrow it. officials start with the assump - within that dysfunctional sys- tion that such programs must be tem, we wish to look at alter- If governments did start creating funded by taxes or deficit spend - natives, specifically those that money directly, they would be ing, anathema to politicians of all can be implemented without most inclined to do so when the stripes. Government-created mon economy needs it the most. Think ey would be even further beyond challenging the current bank- of Abraham26 Lincoln’s Greenbacks - their ideological limits. So, once ing paradigm. program, which allowed the again we have to look elsewhere North to fund and win the U.S. Civ Publicfor a solution. & Non-profit il War, or the programs launched Bank-created Money under FDR’s administration in response to the . Yet nobody would expect even - However, given the power of the Government owned (public) these public banks to just give private banking over banks and banks owned by com money to citizens! The idea of a - national governments today, it is munities and non-profits create basic income grant is completely unlikely that any government will - money in the same way as private- outside of their conceptual frame take back the power to create its banks, i.e., with accounting entries- work.Government-created We have to look elsewhere. own money to inject into its econ Money when making loans. The differ omy, whether for basic income ence is that in the case of govern - grants or other uses. ment-owned banks, profits are Yet some countries have, or are returned to the government, while As noted above, most govern in the process of, exploring basic non-profit27 banks recycle profits ments today have ceded their income programs, even without into new loans and community right to create money to the - - their governments printing the projects. private banking industry. The U.S. money to do so. Unfortunate government, for example, expands The private banking cartel, how ly, their default mechanism is the money supply by spending ever, treats public banks as a taxation or borrowing, both of money (essentially by writing competitive threat. In recent times which are rife with practical and checks drawn on an account at the more than 20 U.S. states have political challenges. This is the Federal Reserve, which creates the introduced legislation to replicate- case even though sophisticated money on its books as all banks the example set by the publicly financial models prove that most do) and contracts it with taxes or - owned Bank of North Dakota. Ev governments can save enough bonds. ery single one has been defeated through elimination of high-over as a consequence of lobbying by the private banking industry.

10 | The UNO: A new complementary currency National Commonwealth Group Beyond the question of whether As of June 2017, their ability to be exchanged for the banks that create our money Switzerland’s WIR certain goods and services. are publicly or privately owned, Cooperative held We certainly don’t have to depend one fundamental fact makes banks- 5.4 billion CHF on the for-profit banking industry of either type an improbable ($5.6 billion USD) in source of basic income money. No assets.33 to create a currency for us. And we do not have to get permission body would ever expect them to- just create and give away money from anyone (with the exception- of certain governments who may with no review process, no col - curtail complementary curren lateral and no interest attached. 32 - Thus we cannot look to this seg cies), nor take something from anyone else (tax) to create this ment of the financial community Chiemgauer in Germany (com new currency. toCitizen-created provide a solution. money plementary currencies). They all have value only because we agree We the people can chose to create Asthat citizens they do. we can agree it (as digital units) and do with it among ourselves on any If we are to break free from our - what we want, including giving it dependence on banks for money kind of value exchange to ourselves. We can create it out mechanism that func- creation and cannot count on gov- of thin air, without taxation and ernments to assume this function, tions like money. without government involvement. then we have to turn to comple - Any value we place on it is up to mentary currencies created by the us. people for the people. That happens all the time. Thou We propose to create a new sands of complementary currency Complementary currencies exist model digital complemen- - systems already exist. Some are parallel to national currencies.28 - general purpose and can be used tary currency and call it the They can be limited geographi to purchase any kind of good UNO. We envision the UNO as cally (like BerkShares29 in Massa or service as long as the seller a universal tool that can begin chusetts or to specific groups (like accepts that particular currency in the Swiss WIR, which serves to eliminate poverty via a basic lieu of a national currency. income program, and do so in a businesses in several industries.)- Most have been based directly on Others are more limited in scope. relatively short period of time. valuation against a national cur For example, when a traveler rency, or indirectly via a basket of earns or uses airline miles, he or goods or an hour’s labor, and thus she is in effect participating in a fit in with the existing financial complementary currency system. paradigm. Airline miles can be used to not only purchase other flights, but But there is no inherent value to - hotel rooms, car rentals, vacations, any currency, whether we call gift cards, and other goods or ser it a dollar, yen or (national vices and in some cases cash. Thus currencies are no longer tied to or the they are similar to a currency in gold or any other hard30 asset),31 or the Bristol , LETS,

National Commonwealth Group The UNO: A new complementary currency | 11 03

The UNO

Distinguishing 1. - Features This is just as true on the supplier No contribution side as on the recipient side. His The UNO has one required torically, basic income initiatives- particular feature (described below) have proposed- distributing the national curren that distinguishes How will the UNO get into the cy, which some non-profit orgaThis it from most oth- hands of users? That is where this Startupnizations Gives use Poorto provide People grants A Year’s as described in the article, er complementary complementary currency differs- Income, No Strings Attached. 34 currencies, and an- from virtually all others. Normally one has to contribute time, mon - other that it shares ey or something else of value in Such a program requires donors in part. exchange for receiving either a na to contribute national currency tional or complementary currency. money to the non-profit to fund those grants, and so is limited by But what if someone has no excess the donations it receives. money to purchase a currency, as - is widely the case throughout the Not so with the UNO. To allow BoP and in poorer communities universal participation and main - throughout the developed world? tain independence from national currencies, the UNO is a complete Or is incapable of contributing - time, services or other personal ly self-contained currency. effort? To reduce poverty, every We intend to provide everyone one has to be able to participate, desiring to receive a basic income not just those who can afford it. a priori - in UNOs with a monthly grant Therefore, obtaining the UNO (described below). They need cannot require an contri only sign up and the grant begins bution.

12 | The UNO: A new complementary currency National Commonwealth Group [Theoretical economist Silvio] “Gesell advocated currency decay as a device for decou- pling money as a store-of-value from money as a medium of exchange . . . The result, he foresaw, would be an end to the artificial scarcity and economic depression that hap- pens when there are plenty of goods to be exchanged but a lack of money by which to exchange them. His proposal would force money to circulate. No longer would the own- ers of money have an incentive to withhold it from the economy, waiting for scarcity to build up to the point where returns on real capital exceed the rate of interest . . . freed from the control of the wealthy, money would circulate freely instead of coagulating in vast, stagnant pools as it does today. “—Charles Eisenstein, Sacred Economics35

2. - to flow, no strings attached. We That means if someone accumu may limit the total amount of the Grant limits & lates three full months worth of grant under certain conditions UNOs in the grant portion of their- (described next), but there will account, they will not receive any be no means test or oversight on more grant UNOs until they re- what the recipients do with their One of our main goals, in addition duce that total by spending some grants. They are free to use them to improving individuals’ standard or all of them into the commu as they wish. nity. As long as they spend their of living, is to get currency flowing- within communities. The more grant UNOs, they will continue to Our premise is that everyone who - UNOs that circulate, the health receive new ones. needs and wants UNOs should be ier the local economy. Thus our - able to receive them as a basic hu In addition to the monthly grant program is designed to encourage - man right. With regular grants of received from the UNO bank (de - users to spend their UNOs. We do UNOs, they will have the currency scribed under Implementation be - this using two mechanisms: grant to spend into their local econo low), users can also receive UNOs limitsGrant limitsand demurrage. mies. They may not be in a posi in the form of transfers from other- tion to contribute time or money - users. These transfers can result to acquire this currency, but they from payments for goods and ser If a user does not spend their nonetheless can make a contribu vices or simply be gifts (such as a newly granted UNOs, they will tion by being a consumer of goods user giving some of their UNOs to cease to receive their monthly and services acquired with their a family member.) Such transfers grant beyond a certain point. That UNOs. - have no limits. limit may be modified over time, but we plan to start by withhold ing grants after three months.

National Commonwealth Group The UNO: A new complementary currency | 13 -

Those two different types We will charge a demurrage to us Similarly, the UNO will likely be have different impacts on the local ers who attempt to let their UNOs valued by its user community economy:• Grant UNOs: pile up. It will likely be called an at a rate similar to the national account fee and will be charged by currency. But in many economies, Newly issued the UNO bank, following certain that unit is too high to address the grant UNOs (like newly minted guidelines to be determined. The many millions of small purchases money) will not have been placed exact percentage and rules are yet that are made for a fraction of that in circulation. As long as they to be decided. - value. - sit in a member’s account, they will have no impact on the total Our goal is to maximize the in To facilitate fractional transac amount of UNOs in circulation. - centive for moving UNOs within tions, we plan to track 1/100th However, that means they are also the community, but not be overly- of an UNO using a unit we call the not contributing to the local econ aggressive with the fees involved. Centi. In U.S. dollar terms, it would omy.• Transferred UNOs We also need to adjust for poten Implementationbe equivalent to the penny. tial inflation (explored below) by : A merchant matching the amount of UNOs in may sell goods or services and circulation with economic output. We start by designating a region accumulate many times his or her That may require some real world personal monthly grant in one to deploy UNOs. It requires the experimentation to determine the presence of enough participants month of business transactions. right balance. So, to make sure the merchant so that the UNO can serve as continues to circulate those UNOs These two features, the either the primary or secondary in the community, we included an unconditional granting of trading currency. The region may additionalDemurrage element — demurrage. UNOs and the demurrage, be a village or a group of villages, should greatly simplify or any other group of residents rollout, speed growth in constituting an economically Here the UNO resembles many usage, and accelerate viable trading group, i.e., that can other complementary currencies circulation within local provide at least a basic spectrum in that it loses value over time. economies. of goods and services to each other. Demurrage36 can be likened Both the UNO and the Centi will to negative interest or a tax Fractional transactions - be created by a central non-profit on the currency. For exam- organization (TBD) that manag ple, a currency with a 10% es the creation, distribution and- demurrage fee would be Historically, most complementary withdrawal of these units. The reduced to 90% of its initial currencies have been valued in UNO and the Centi are the “peo step with the national currency. value at the end of the demur- ple’s currency,” created by us, For example, the is for us – without any government rage period (daily, weekly, backed by sterling deposits and is involvement or restriction, and monthly or annually). equal in value to £1 sterling; the without any involvement of banks, Chiemgauer can be exchanged 1:1 private or public. for , and the WIR Franc is pegged to the .

14 | The UNO: A new complementary currency National Commonwealth Group - - - that will manage the effort world There would be no38 economic eli wide. The website for the cen gibility test (as with a guaranteed tral bank will be www.uniex.net minimum income or welfare). (UNIEX). UNIEX is an abbreviation Grants will be made to individuals, for UNIversal EXchange. adults and children alike (probably - lesser amounts for dependent UNIEX will seek out one or more - children under their parents’ local partners interested in estab account). - Local distribution and manage- lishing a local UNO bank, for man ment points will be established aging the distribution of UNOs 37 This would create a rising eco worldwide with something akin in that region. UNIEX may well nomic tide that lifts all boats, and to a local bank that we call an do so in conjunction with NGOs the assumption is that the more UNO bank. alreadyRecruiting working participants in that region. UNOs there are circulating in a community, the healthier the local - economy. If someone doesn’t need or want them, they simply don’t UNO bank (PBFI) The key to successful implemen tation is directly tied to the UNO’s request to receive them. acceptance by the local population Participants will receive their - as a viable currency which they grants deposited in a UNIEX The entity that will actually issue can use to buy locally available account similar to a bank account. the UNO is a Public Benefit Finan food, clothing, housing, education They will access UNOs primarily cial Institution. A PBFI goes well - and the other basic necessities. via a banking app on their mobile beyond a banking function for phones and other mobile devices, the issuance of a complementary Once the UNO bank is operation (see Technology below) as well currency; it is more like a bank, ally viable and the rest of the as through Internet-connected venture capital firm and a public infrastructure is in place (no brick here computers. foundation rolled into one. Its and mortar facility is required, full functions are described . just connection to the Internet), However, for the sake of simplicity, participants can be recruited to in this document we will simply receive UNO grants. Ideally this call that entity an UNO Bank. will entail a substantial group of participants being presented with Each local UNO bank will exist this opportunity at the same time under authority from the central (e.g., group village meetings) and non-profit organization (which signing up together. will serve as the UNO Central We propose to provide a Bank) and receive all the tools it monthly grant of digital UNOs needs to manage local distribution 89% of adults in the West have of the currency, along with a tie to anyone asking to receive bank accounts versus only 41% in to the central computer system them. in the developing world.43

National Commonwealth Group The UNO: A new complementary currency | 15 Since the developing world, home Mississippi, which in turn will to the majority of the BoP, has- far have much less purchasing power outpaced the developed world than a dollar in rural . in adoption39,40,41,42 of mobile bank - ing, adoption of the UNO Thus the size of a potential grant should encounter few technologi would be tied to the local cost cal barriers. of living, where the numbers of- UNOs would correspond roughly Since there is almost no physical to the number of national cur - friction preventing expansion, we rency units (like the dollar) it We can adjust the percentage expect that adoption will be paced- would take to have a basic subsis of the demurrage to fit local by the speed at which we can find- tence income for that region. The conditions. local UNO banking partners capa assumption is that the vast bulk - ble of being trained in implement of the grant would be exchanged ing the system. right in that region, just like a na tional currency. Thus even though We anticipate, based on previous the UNO would be universal (like experiments with basic income, - a dollar) its value would fluctuate er attribute that gets to the heart that once the UNO is adopted in- based on local conditions. of one key objection to the basic one village in a region, neighbor income concept, the belief that Our goal is to encourage ing villages will want to partici continuing to pump money into an pate. As word spreads, the UNO recipients to use their UNOs economy (via monthly grants) will could easily grow virally. It is not as soon as possible in order ultimately lead to inflation. out of the question that poverty to get them circulating in the Our grant limits help to curtail could be greatly reduced if not local economy. largely eliminated in the areas inflation at the source. If a grantee- whereLinked the to UNO cost is deployed. of living cannot spend their UNOs because there are too many already chas ing too few goods and services, then by limiting those grants we We propose that the grant amount We do so with the demurrage throttle the amount that might go be based on the general cost of system described above. If an into circulation. - living within a particular region owner does not transfer units they (nation, region, state, etc.). An have received within a prescribed When UNOs are already in circu UNO will be an UNO anywhere in period of time, those units will lation, the demurrage part of our the world. losePreventing value. inflation system counters any inflationary tendencies. If the total money in However, its value will largely circulation becomes more than depend on the cost of living in a - - the local economy can absorb, local economy. A dollar in Silicon Our grant limits and demurrage the excess is automatically extin Valley will generally have less pur system will not only encourage - - guished until demand matches chasing power than it will in rural users to spend UNOs rather than retain them, but they have anoth supply and production is in bal ance with money in circulation.

16 | The UNO: A new complementary currency National Commonwealth Group 04

The UNO in Practice

We anticipate the primary usage of One of the best such applications Many of these businesses can be the UNO will go would be for locally grown food. started with the equivalent of just UNOs would give local residents a few hundred dollars. Microcredit to obtaining local more resources with which to has attempted to fill that capital goods and services. better support their local farmers gap, but microcredit’s collective and get healthier and fresher food success track record is spotty at in the process. Communities can best. It entails a high degree of then move on to other elements overhead, has a high Services by definition that are critical to their health and (which means money leaves the - vitality. local economy to pay interest are the time and effort of Small businesses - to the lender) and tends not to - others, and thus are fun produce businesses that survive damentally local in na One of the foundations of any beyond the initial borrower (usu ture. Goods so obtained local economy is the myriad ally a woman) into a family owned business. will be those that are of independent small busi- largely produced locally, nesses that provide products It would be preferential for the so that the providers can and services to local resi- small business owner to get a - grant rather than a loan, adequate produce and sell their dents, including agricultural to cover the costs of tools and ini goods to buyers using products, furniture, personal tial supplies/inventory. That way UNOs and use their own care, clothing, construction they do not have to take money UNOs to purchase their and more. out of their sales to cover their raw materials. capital costs, nor does the interest money leave the local economy.

National Commonwealth Group The UNO: A new complementary currency | 17 - - We propose that local UNO bank Like the small business grants Money sent home by migrants ers review and approve applica above, the source of those goods competes with international aid as tions for small business grants and/or the labor must be willing one of the largest financial inflows to cover the initial capital costs to accept payment in UNOs. Thus to developing countries. According for establishing a small business. the UNO can provide- a to the World Bank, approximately One of the key conditions for this grant to cover the cost and the $429 billion USD in remittances would be that the source of the - community gets a needed re were sent in 2016 to developing tools, raw materials, etc. be willing Remittancessource to serve the common good. countries, larger than Official to accept UNOs as payment. Sup Development Assistance and more pliers that require payment in a stable than private capital flows. national currency may have to be One of the ways that the poor in 2017 figures were 46expected to excluded until such time as UNIEX reach $444 billion. - the developing world are able - is in a position to exchange UNOs to survive is by receiving money One big drawback to remittances for one or more national curren from economic migrants work cies (see below). is the high fees often charged by ing in wealthier countries. This service providers. Given that the If the seller will accept UNOs, process is commonly44 referred to senders often work for low wages and the UNO banker feels that as remittances. A remittance is in the foreign country, the costs of the business plan is worthy, the a transfer of money in a national remittances can represent a large banker would request an invoice currency by a foreign worker to percentage of the money sent, from the seller and the bank an individual in his or her home itself already reducing the living would make a grant to purchase country. standards of the sender. those items directly. That makes the bank the initial owner of the There are two ways in which goods, which it then grants to the UNIEX can make this process more effective for senders and new business owner. That way -the bank can guarantee that the goods recipients. are actually purchased and pro 1. vided to the business owner at the pricePublic agreed works upon. Since the UNO is both a local and a universal unit of a complementary currency, participants can receive- There are many things that a local their allocation of UNOs anywhere community might need in the - in the world. Thus family mem way of publicly owned facilities In Africa, 38% of those with bers living in a foreign county, or infrastructure, such as com - bank accounts say they use who normally send remittances to munity wells, water purification, them to receive remittances their home country, can also send power generation, schools, meet from family members abroad.45 UNOs home as well. ing places, irrigation systems and- roads. A group of local citizens can petition the UNO bank for a com munity grant to cover design and construction costs for such public resources.

18 | The UNO: A new complementary currency National Commonwealth Group 1. They would simply sign up to be Therefore, UNIEX will endeavor to - a recipient of a grant from their establish relationships with other home town/country UNO bank, - grant providers (foundations, UNIEX will solicit parties will and when they receive their NGOs, governments, etc.) that ing to provide outright grants to monthly allocation, can take a por might be willing to fund purchases- UNIEX funds that UNIEX can then tion of it or all of it and transfer requiring a national currency (e.g., use as appropriate. it to other family members back solar panels from a manufactur 2. home – essentially at no cost! er), while UNIEX provides for the- 2. labor and local materials costs. As a fallback in certain circumstanc National currency remittances es, UNIEX may make provision to will help establish a national To send a remittance in a national facilitate the conversion of UNOs currency cash pool that will allow currency, UNIEX will provide the into other currencies. UNIEX to provide the resources to sender with the option to convert cover conversion from the UNO to If a grant requires that a supplier that remittance into UNOs at no - - a national currency. charge, for a nominal charge if the be paid in a national currency, 3. remittance is to remain in the na UNIEX will attempt to make ar rangements with other parties to tional currency, or a combination- of national currency and UNOs. The ability to do so will depend UNIEX will solicit parties willing Above a certain percentage con on one of the following elements to exchange units in a national verted to UNOs, UNIEX may waive being put in place in advance of currency for UNOs when needed. any fees for the balance. such a requirement. Fig. 4 Where UNIEX is able to convert 2017 Estimated Remittance Flows to Developing Countries47 a national currency into UNOs, UNIEX can build up its reserves that can be used to perform other Conversionactivities requiring to a fiat national money. $41 bn Europe & currency +6.6% Central Asia East Asia Middle East & $52 bn & Pacific North Africa +6.1% $129 bn Wherever possible, it is our goal - +2.5 % to see that UNOs are the medium $112 bn $34 bn +2.0 % of exchange for all goods and ser $76 bn +3.3% +3.3 % vices needed by local communities- Sub-Saharan South Asia and their citizens. However, we Latin America Africa recognize that there may be cir & Carribean cumstances where payment needs to be made in another currency, especially a national currency.

National Commonwealth Group The UNO: A new complementary currency | 19 05

Technology

Existing off-the-shelf - technology can en- many poor to optimize their ca SMS), loans, invoices, remittances, able a basic UNO pacities, to become an instrument demurrage, online marketplace - that serves a qualitative human (allows members to advertise and- system. More com- development.” - promote their products and ser plex features are vices to other members and pro Through Cyclos, STRO has provid possible with cus- - vides users with search functions ed software solutions for over 20 to find what they want, contact tomization. years to more than 1,000 provid sellers, etc. (similar to Craigslist)), ers of complementary currency shopping cart, commercial and systems. In addition, Cyclos also private and much more. - provides for Internet and mobile Online and mobile banking soft Several organizations banking services, barter systems, campus card systems, time banks ware programs such as Cyclos have already developed and LETS systems, micro finance currently offer the majority of the software platforms to systems, remittance systems and functions the UNO system would support complementary Servermore. side require as part of their off-the- currency systems. shelf solutions. Only a few of our desired features, most importantly- One of the leading providers To manage the UNO lifecycle the ability to time stamp each unit operates48 under the brand name - using Cyclos, we plan to install the of currency for enhanced demur Cyclos. Cyclos is a project of a - latest Cyclos software on our own rage purposes, will require some network of non-profit organi - servers. - customization of the basic Cyclos zations called Social49 Trade Or 4 software package. - ganizations (STRO ) from Lat Features include member ac in America and Europe, whose counts (like conventional checking To implement UNIEX with min - imal delay, we therefore plan to objective is “to move money as- and savings accounts, but in any - a major steering mechanism in currency), full online and mobile launch with the Cyclos 4 Commu society from causing environ banking (payments and deposits, nities package and over time mi mental abuse and preventing grate to a full-feature standalone system dedicated to UNIEX and its UNO system.

20 | The UNO: A new complementary currency National Commonwealth Group In Kenya, 68% of adults say An initial Cyclos 4 Communities they have used a mobile phone under 1 billion in 2000 to over 6 system is under development and to send or receive money in the billion, of which nearly 5 billion54 can be viewed at http://www. past 12 months. More than half are in developing countries. uniex.net or https://communities. of them have bank accounts.50 cyclos.org/uniex.Client side As the cost of a simple mobile phone has fallen below $20 in - most of the world, 55 mobile banking is becoming affordable in emerg Cyclos comes with a robust mobile - ingWidespread markets. adoption interface. It is compatible with the Since December 2008, French - Android, iOS, Blackberry and Win telecom Orange has signed up one dows operating systems (most million people for its Orange Mon mobile phones in the developing ey mobile banking service in Mali, Each local UNO bank will have a world run on the Android OS). Senegal, Ivory Coast, Madagascar,- dedicated section in the UNIEX Kenya and Niger. British mobile backend system managed by the Users can make and receive - operator Vodafone has 13 mil local UNO banker. UNIEX will payments, view member account lion customers in Kenya and six provide for the allocation of UNOs- balances, view account histo million in Tanzania for its mobile to each UNO bank, which in turn - ry, search for users in the local banking service, which generated allocates them to its local partici network and more. Transactions 670 million transactions last year. pants. The local system will man can occur directly between mobile In Kenya and Tanzania, Vodafone age the withdrawal of local UNOs devices, or be initiated on one end subsidiaries now process more and the process of “parking” them only (for example, a payment can- international wire51 transfers than in the local UNO bank for later be sent to another user’s phone Western Union. re-release in a new grant. number and thence to their ac count). Globally, the number of mobile Given that the UNIEX backend - banking users is expected to surge system is capable of near infinite This is significant because the more 52than sixteen fold, to 894 expansion, there are no technolog most seamless way of accessing million by 2015 from 55 million in ical obstacles to slow adoption- of the functionality required to - 2009. Almost all of those mobile the UNO. And most importantly, administer the UNO program is to banking customers — 78%, or blocks of new UNOs can be cre use existing mobile phone net - 697 million people — are in Asia, ated on demand at a moment’s works. As we mentioned earlier, Africa, the Middle East and Latin notice, such that there will never the developing world is far out America. a shortage of UNOs to supply this pacing the developed world in - system. The potential is great in Latin adoption of mobile banking. In- countries with few retail banking America, where only 35% of peo An estimated 1.7 branches, mobile telecom net ple have bank accounts,53 only 19% billion unbanked works have emerged as major have bank cards but 90% have customers world- - providers of financial services, mobile phones. wide have access to mobile phones.56 bypassing traditional banks. The number of mobile subscrip tions worldwide has grown from

National Commonwealth Group The UNO: A new complementary currency | 21 06

Benefits of the UNO

The UNO corrects or amelio- The UNO is easy to obtain. rates many market inequities and inefficiencies. over tasks in fields as diverse as , manufacturing, Entitlement programs and aid • - professional services, medicine packages can be complicated and construction. Not everyone - for intended beneficiaries. UNO It can fill the gap between will will be able to find paid work, and ing workers and work to be done recipients have no bureaucracy to all projections point to this prob navigate and no complex signup when there is insufficient national lem growing into the foreseeable currency to pay for the work. This procedures. They just sign up and future, producing a permanent begin receiving their monthly is of particular importance in the glut of workers with too few jobs Theallotment. UNO is fair case of infrastructure projects that to engage them. A grant of UNOs benefit• the community as a whole. can provide a living for displaced . Theworkers. UNO stimulates entrepre- Willing workers no longer have- All people are treated equally. neurship. to compete against those who are There is no means testing and no forced to seek work out of finan Thepreferential UNO prevents treatment. fraud and cial• necessity. corruption. - Local economies flourish as Workers can take time to gain entrepreneurs have an income to - the skills to compete for bet survive on while building their • ter-paying jobs. businesses. And it creates custom Because it is a grant to all, there is no need to cheat or pay bribes to Job seekers have the luxury of ers as people have currency to buy Theparticipate. UNO puts people in contro finding work that is the best fit for Thegoods UNO and is services. simple to adminis- - them, increasing efficiency in the ter. l. Thedistribution UNO aligns of labor. with technologi- Recipients make their own deci cal advancement. Because there are no eligibility sions about what to do with their - money, rather than politicians, requirements, the UNO dispenses- with the need to create a bureau local bureaucrats or distant aid Worker productivity is advancing organizations. faster than the need for workers. cracy to verify initial and continu Robots and automation are taking ing eligibility.

22 | The UNO: A new complementary currency National Commonwealth Group 07

Appendix A: Basic Income Primer

One way to funda- 58 - mentally change The idea has been around for Most people in the living standards centuries (Thomas59 Paine wrote- are unaware that the country- al worldwide is to about the need for a guaranteed- most had a basic income system minimum income ) that all cit - during the Nixon administra - grant every person izens deserve to receive an out tion, supported by the president sufficient money to right grant in the form of subsis himself. The U.S. House of Rep tence income sufficient to provide resentatives60 actually passed a- guarantee that their for the basics for survival. bill by a wide margin to create basic needs are tak- a basic income for all U.S. citi It builds on the idea of a social zens, but it died in the Senate. en care of, whether heritage transmitted from one - - or not they work or generation to the next. Just as Over the years there have been a wealth is transmitted from par number of basic income experi can contribute in ents to their children, a basic ments and the idea is starting to any way. income would be distributed to gain traction. - everybody equally, because it is the fruit of progress by a whole The Basic61 Income Earth Net - nation, and not of individual work. work, which fosters discussion That means they would on basic income, notes “Academ Progress is a collective good to ic discussion of basic income - have enough money to which all are entitled equally as and related policies has been obtain adequate food, members of an organized society. growing in the fields of econom shelter and clothing, Bank-created money, it is ar- ics, , political science, be provided with basic gued, is nothing but the moneti- sociology, and public policy and receive zation of the production capaci- over the last few decades — - with dozens of journal articles an adequate education. ty of the whole community. New - money thus should belong to all published each year, and basic 57 This concept is general of society and not be the proper- income constituting the subject ly known as basic in ty of the bank. of more than 30 books in the come. last 10 years.”

National Commonwealth Group The UNO: A new complementary currency | 23 Reporting on studies of basic income worldwide, Bloomberg’s Charles Kenny writes, “Worldwide, richer people express fears about handing money to poorer people. Giving poor people money is no way to stop them being poor, the thinking goes: Surely they will just waste it … A growing number of studies suggest that this is wrong-headed, that just handing over cash even to some of the world’s poorest people actually does have a considerable and long-lasting positive impact on their incomes, employment, health, and education.”62

- Recently, basic income has been- also correlated with better school In a comprehensive 2010 report64 endorsed by NGOs and other ad completion rates, higher economic “Just Give Money to the Poor,” vocacy groups as well as govern growth and improvement in the researchers from the Brooks ments in developing countries. In condition of women.” World Poverty Institute at the the developed world, the idea of a- - University of Manchester examine- basic income is often mentioned The evidence demonstrates basic- the growing trend in a number of as a solution to increased automa income prevents poverty, im countries, including China, Mex tion and the resultant erosion of proves health, increases educa ico, India, , Indonesia, and tion, stimulates entrepreneurship, employment.Studies show basic South Africa. Their conclusion? - income works increases the efficiency of public Direct transfers to households are services, and boosts creativity, a key component of effective pov community engagement and erty reduction and development - mental health. Typical evaluations strategies. - Basic income has been tested in record no reports of the basic both the developing “Numerous and devel income being spent on drugs, The following is a sampling of pro oped world. As reported63 in The alcohol or tobacco. Evaluations grams that have been evaluated. Washington Post, also found that monthly transfers These results are clear — if you studies of development aid have- improved food security, while give poor people money they’ll found impressive correlations - lump sums tended to increase use it to make themselves and between free money and reduc household assets. Similarly, short- their families better off and gain tions in crime, inequality, malnu term grants stimulated short-term- a foothold on the ladder out of trition, infant mortality, teenage activity such as food purchases, poverty. pregnancy rates and truancy. It is while long-term grants also stim ulated economic activity and asset building.

Today more than 110 million families in at least 45 countries benefit from basic income programs.

24 | The UNO: A new complementary currency National Commonwealth Group India, Self-Employed Women’s Associa- increases business assets by 57%, work hours by tion & UNICEF, 2011-201265 17%, and earnings by 38%. • Significantly greater food security, healthier • Many also formalize their enterprises and food purchased, reduction in the number of mal- hire labor. nourished children. , Women’s Income Generating • Fewer illnesses and greater access to medi- Support (WINGS) Program69 cation and medical care. • Dramatic increases in business • Increased school attendance. • Dramatic reductions in poverty. • Increased economic activity: residents in basic income villages were three times more • A year after the intervention, monthly cash likely to start a business than those in the control earnings doubled from the equivalent of $6.60 communities. USD to $12.52, cash savings tripled, and short- term expenditures and durable assets increased • Increased agricultural activity and yields. 30% to 50% relative to the control group. • Decreased debt and increased savings. Kenya: GiveDirectly, 201170,71 , Namibian Basic Income • Reduced hunger. Grant Coalition, 2008-200966 • Enabled investment in assets, small busi- • Significantly reduced poverty. nesses and livestock. • Increased economic activity; recipients start- • Increased consumption. ed small businesses, stimulated by the increase in purchasing power. • Increased psychological wellbeing. • Notable improvements in child health, access Canada: Province of Manitoba and to health care federal government, 1974 -197972 • Increased school attendance. • Increased high school graduation rates. • Significant reduction in crime. • Decreased hospitalization rates, in particu- lar, hospitalizations related to stress (accidents, 67 Brazil, ReCivitas, 2008- injuries and mental illness). Physician diagnoses • Improved ability to meet basic needs; im- of mental illness also declined. proved expectations for children and future. United Kingdom, Broadway, 2009-73 • Improved nutrition, with 25 per cent of basic (Program provided an unconditional grant to 15 income devoted to food expenditures. homeless people.) • Improvements in health, clothing and living conditions. • The majority of participants moved into housing and stayed housed. • Increase in microenterprise. • Used grant to buy furniture, clothing, cell Uganda, Youth Opportunities phones, televisions and pay off debt. 68 Program (YOP), 2006- • Many began to plan for the future, took • After four years, half of participants practice classes, developed independent living skills and a skilled trade. addressed physical and mental health issues. • Relative to the control group, the program • No one spent the money on drugs or alcohol.

National Commonwealth Group The UNO: A new complementary currency | 25 Gaining Acceptance The concept of basic income has been gaining momentum in recent years, securing more attention from mainstream media and from politicians of all ideological viewpoints. Liberals support the idea because it would lift citizens above the poverty line at a stroke. Conservatives like it because it would eliminate much of the federal bureaucracy.

A Sampling of Recent Activities • The province of Ontario, Canada, launched a guaranteed minimum income pilot project in 2017.74

• implemented a basic income program, beginning with a pilot stage in December 2017. The Finnish Social Insurance Institution (KELA) drafted a plan to pay every citizen ~$876 per month, tax-free, which would replace all current social support programs.75

• Switzerland held a countrywide referendum in 2016 to grant every Swiss citizen a monthly un- conditional basic income of 2,500 CHF (~$2,800 USD). The measure fared better than expected, but failed, in part because of fears that the country would be alone in doing so and thus become a mag- net for immigrants. 76,77,78

• According to a recent opinion poll, 60% of people in France support the idea of a basic income.79

• In January 2016, the city of Utrecht in the began tesing several different basic income regimes for its welfare recipients. Currently 30 Dutch municipalities are considering pilot projects.80

• Ireland’s Fianna Fáil party will include a commitment to a Basic Income of €230 a week in its man- ifesto for next year’s general election.81

• The 2015 general conference of the Liberal Party in Canada approved two motions82,83 in favor of basic income, including a federal pilot program. Local initiatives are also underway in the provinc- es of Quebec and Prince Edward Island, and the mayors of Edmonton and Calgary in Alberta have endorsed basic income pilot projects in their cities.

• In New Zealand, the recently elected leader of the Labour party and new leader of the opposition, Andrew Little has come out in favor of a universal basic income, saying in a radio interview that he would like this to be a focus of policy for the party.84

• In July 2105, the regional Council of Aquitaine, France voted through a motion marking the start of a process towards running in the region.85

More on Basic Income

1. “A basic income for everybody!”86 48 mins. This video by Alina Kneepkens and Jozef Devillé was broadcast on Belgian national television on December 18, 2014. It contains a section that explores the experiment in Namibia described above.

2. “Basic Income The Movie.”87 1hr 38 mins. This German video was used as a basis for discussion during the time the Swiss petition for a Basic Income to be included in the constitution was under way.

26 | The UNO: A new complementary currency National Commonwealth Group 08 Appendix B: Complementary Currencies

Complementary cur- rencies (also called History attests to the power of complementary currencies Essentially, they created it local or alternative themselves. During this era, two on a grand scale. forms of currency functioned in currencies) have been parallel. - with us as far back as One was centralized royal ancient Egypt, existing (similar to today’s national side by side with state MoneyAs Stephen for a BelginNew World and Bernard88 currencies), used primarily for sponsored currencies. Lietaer write in their book long-distance trading and the , Europe purchase of luxury goods. in the Central Middle Ages was prosperous indeed. The quality of The second was a network of local currencies. Most of these life for ordinary people in the 12th- They usually address century may well have been the had a demurrage charge, (the a function or need not highest in European history. Calor longer they were held, the less ic intake was higher than today, they were worth) and thus were adequately served by the put quickly into circulation and national currency. - and working hours were limited to no more than six hours a day, exchanged more frequently than- A key attribute of complemen five days a week, with frequent the royal coinage. This was what tary currencies is that they holidays. Ordinary people created paid for the architects and build remain in and circulate within healthy local economies with high ers of those great cathedrals. - their communities to a much- living standards . Unfortunately, this Golden Age greater degree than national came to a brutal end at the clos- currency, which has no con It was during this period that almost all of Europe’s cathedrals ing of the 13th century when nection to the local community local governments and adminis and easily migrates out of it. were built. These structures were financed by the people, not the trations were overrun by strong,- central authorities with large church or the aristocracy. We know where they found the time. armies. The dual currency sys But where did they get the tem was abolished and replaced money? by a monopoly of royal coinage. National Commonwealth Group The UNO: A new complementary currency | 27 - The elimination of local currencies The end of this age, like that of Two well-known experiments, - led to an economic crisis, which medieval Western Europe, coin more than a century apart, in turn led to a general societal cided with the introduction of a demonstrate the power of com breakdown and decades of famine currency system similar to today’s plementary currencies to improve and starvation, and ultimately the- national currencies, which was people’s lives and foster strong Black Death, the plague which imposed on the Egyptians by the local economies. killed up to 60% of Europe’s pop Fillingconquering unmet Romans. needs 1. ulation. took - 89, 90 This was not the first time The “Miracle of Wörgl” Despite such efforts over mil that imposition of a central place during the Great Depression,- currency devastated an econ- lennia to stifle complementary- when Austria along with most of currencies, they have survived. omy. the rest of the world was experi- Thousands of innovative com encing 30%-35% unemployment. plementary currencies crafted Desperate to improve the situa around the world are addressing tion locally, where he faced a large - an array of social and economic population of unemployed and issues and objectives. Ancient Egypt had a dual mone 200 penniless families, the town’s tary system, with long-distance mayor issued a stamp as a Evidence shows that they fill the- . currencies much like our own - gap between community needs national currencies, together with and the amount of national cur - He paid for work on a long list of demurrage-charged local curren - rency available to fund solutions. projects by depositing his existing- cies that enabled local exchanges Complementary currency exper funds in the bank and using them among the people. This dual mon iments have shown great success as a guarantee for comparably val etary system, which endured for in addressing issues as diverse ued stamp scrip. Because a stamp thousands of years, ensured one as infrastructure development, of the highest standards of living human services, environmental of the ancient world. projects and more.

28 | The UNO: A new complementary currency National Commonwealth Group - needed to be applied each month The anti-hoarding device proved Within weeks of its launch, the (at 1% of face value), everybody extremely effective as a sponta currency had begun to strengthen- who was paid with the stamp neous work-generating device. and stabilize the local economy.- scrip made sure he or she was More than 200 local small busi spending it quickly, automatically Wörgl’s demonstration was so nesses have joined the Bangla providing work for others. successful that it was replicated- desh Business Network, and thus In a very short period in neighboring towns and soon gained access to the Bangla-Pesa. 200 townships in Austria want of time, unemployment The “typical” network member is ed to copy it. At that point the dropped to nearly zero. a 35-year-old mother who is the decided to assert its main provider for 2-3 children. monopoly rights and succeeded Increases in sales thus have a in shutting down the experiment. larger effect on women, level- The unemployment rate quickly ing out the gender gap. Wörgl managed to not only re- shot back up to the same level as pave the streets, expand the water before the experiment, proving just how significant the positive system and plant trees, but built- - new houses, a ski jump and a effect of the stamp scrip had been. bridge. Six villages in the neigh 2. So far, overall trade for business borhood copied the system, one of es in the network has increased which built a municipal swimming on average by 83% compared to pool with the proceeds. Even In contrast, another experiment baseline data, and average daily the French prime minister came elicited a different reaction from sales have increased by 22%. calling. authorities, albeit circuitously. Bangla-Pesa users have gained In 2013 in the slum community - 16% more spending power, Interestingly, the bulk of the work known as Bangladesh, Kenya, the - largely going toward food, water was provided by the circulation Mombasa-based non-profit orga and cooking fuel. Overall, the- use of the stamp scrip after the first nization 91,92Koru introduced the Ban of the complementary currency people contracted by the mayor gla-Pesa (pesa is the Kiswahili appears to expand market ex spent it. In fact, every one of the word for money). changes in the community. schillings in stamp scrip created between 12 and 14 times more employment than the normal schillings circulating in parallel.

“The program has measurable benefits for and could subsidize services otherwise provided by county governments. This shows that empowering com- munities to issue their own means of exchange is a simple and effective tool for reduc- ing poverty and creating market stability by providing a way of trading which can be used even during harsh economic conditions and market stagnation.” —Morgan Rich- ards, Monitoring and Evaluation Officer, Koru-Kenya, 2013-2014.93

National Commonwealth Group The UNO: A new complementary currency | 29 “For a region, city, or country to have a robust currency of its own, it must have a robust economy of its own as well. Key to building one is what economist Jane Jacobs called “import replacement”—the sourcing of components and services locally, and the development of the associated skills and infrastructure. Other- wise, a place is subject to the whims of global finance and dependent on com- modity prices over which it has no control. In “developing” countries that still have strong local economic infrastructure, local currencies help to preserve that infrastructure and insulate them from global financial predation. “ —Charles Eisenstein, Sacred Economics94

The currency not only increases - transnational corporations, local Perhaps the best-known example overall trade in Bangladesh, but currencies only work if there is is , a decentralized digital also increases trade in the nation a system of local production for currency used for peer-to-peer al currency. After initially trying which it can mediate exchange. transactions. to block the program, the Kenyan government is now pushing to For this reason, we are targeting replicateLimitations it in other locations. the developing world, places like Africa and India, or debt ridden - areas like Puerto Rico as the launchpadGlobal complementary for the UNO. In today’s global economy, com currencies plementary currencies seem to - As of 2015, the number of work95 best in localities that retain merchants accepting bitcoin a high percentage of local produc - exceeded 100,000.96, 97 tion. Some forms of complementary- - currency can stimulate transac In developing countries that still tions on a global basis. For ex have strong local economic infra ample, virtual currencies are not structure, local currencies help to local in the tradition sense, but - Companies accepting payment in preserve those infrastructures and they do cater to the specific needs bitcoin include Dell, Dish Network, insulate them from global finan of a virtual community. Once in - Expedia, Microsoft, Overstock.com, cial predation. But in developed circulation, they add to the total - TigerDirect and Time Inc. PayPal economies dominated by a nation effective purchasing power, just as also allows North American mer al currency and goods provided by with local currencies. chants using its system the ability to receive payment in .

30 | The UNO: A new complementary currency National Commonwealth Group A Sampling of Complementary Currencies

Eco-Pesa, Mombasa District, Kenya, 2010- 98,99 Many of the participants, with elderly parents and other family members living at a distance, - feel that they are providing direct support to their A precursor to the Bangla-Pesa, the Eco-Pesa relatives even though they are not close enough began circulating in 2010 in Kongowea, an in to do it themselves. And recipients felt as if they formal settlement of villages. Such settlements were receiving care from their own relatives, are among the most densely populated areas in heightening their sense of being nurtured and Kenya, but they often lack the infrastructure to enhancing their wellbeing.the elderly tend to prefer the dispose of trash and sewage. services provided by people paid in Fureai KippuNot surprisingly, over those paid in yen. After the currency was introduced, the settlement held a large trash disposal event, in which local To convert this youths were given five Eco-Pesa for each trash community service to yen would seem to dilute bag they filled (the trash was ultimately sent to a Bancothe personal Palmas, connection Brazil, and community 1998- 101,102 ethic. landfill). They spent this cash at local businesses,- which could either use it to buy goods or services from other local sellers or exchange it for na monthly income of businesses in Banco Palmas, Brazil’s first community bank, was tional currency. After just three months with the - Kongowea had risen by 22% conceived, created and managed by the Residents’ Eco-Pesa, the Association in the Palmeiras neighborhood of For , three youth-led taleza, a city in northeastern Brazil. The objective community tree nurseries were established, and was to foster economic and social development the settlement had rid itself of 20 tonnes of trash. - and prevent resources and wealth from leaving the The program was cost effective (only $4,698 USD neighborhood for more affluent areas, and encour was spent over seven months), and provided an aging local production and consumption. - improved mechanism for tracking development Its own “” and the local currency (the “Pal funding and increasing overall accountability.100 Fureai kippu, Japan, 1995- mas”) strengthen Palmeiras’ internal economy. Today, in addition to the small shops that initially joined the project, public transport displays the sign, “We Fureai kippu is a Japanese sectoral currency created accept Palmas,” as do service stations and butane gas in 1995 by the Sawayaka Welfare Foundation so that distributors. increasing the positive people could earn credits helping local seniors. ‬ perception Results have included The basic is an hour of service to of a neighborhood that had only been an elderly person. Sometimes seniors help each identified with violence and poverty,providing improving qual- other and earn the credits, other times family ificationsself-esteem and among vocational residents training and stimulating for women the members in other communities earn credits and andstrengthening young people; of the creating network; small local busi- transfer them to their parents who live elsewhere. nesses, - So, if you shop for a senior who can no longer creating internal savings - thereby generating more jobs and in drive, you get credit based on the kind of service come; within the com and the number of hours. Users can accumulate providing spaces - munity as the local network prevents the outflow credits for when they become sick or elderly for marketing locally produced products. of resources and wealth; and themselves, or transfer credits to parents or oth ers who can redeem them for local assistance.

National Commonwealth Group The UNO: A new complementary currency | 31 Ithaca Hours, Ithaca, NY, 1991-103 oldest and largest local - Similarly, the Brixton Pound’s founding non-profit currency system still operating in the United - organization established a good working relation StatesThe Ithaca Hour is the ship with allowed Lambeth to pay City their Council, business which taxes made in pos . (The name Hour is meant as a reminder Brixtonsible a U.K. Pounds first — participating local businesses that in addition to being a medium of exchange were for commodities, currency represents someone’s as well as pay part of employee salaries. labor, the time taken to provide a skill or perform- a service.) One Ithaca Hour is valued at US$10, The support of the local authority has been crucial the average hourly wage at the time of the pro to the growth and acceptance of both currencies. gram’s inception. Businesses who receive Hours They are not only actively involved, but the city must spend them on local goods and services, help fund the programs. - councils of Lambeth and Bristol, as well as the thus building a network of inter-supporting local Bristol Credit Union, 107,108 businesses. The program is focused on promot WIR Bank, Switzerland, 1934- ing local economic development and community - self-reliance in ways that support economic and social justice, ecology, community participation The WIR Bank (WIR) is a complementary cur andSeveral human million aspirations. dollars value of Hours have rency system in use throughout Switzerland that been traded since 1991 serves businesses in hospitality, construction, - manufacturing, retail and professional services. among thousands of Its name stems from Wirtschaftsring, the German residents and over 900 area businesses, includ- word for business circle and is directly translated ing the local medical center, credit union, public as “we,” which can also mean “community.” - library, local farmers, movie theatres, restau WIR issues and manages the WIR Franc, a cur rants, trades people and landlords. Some local - employers and employees have also agreed to rency used in combination with the Swiss Franc pay or receive partial wages in Ithaca Hours. In to generate dual-currency transactions. The WIR dividuals or businesses who are members of the Franc is digital only, and balances are managed program are eligible to apply for business loans, electronically in clients’ trade accounts. - Bristolmade in HOURS Pound, with Bristol, a 0% interest England, rate. WIR issues credit in WIR Francs to its mem 104 2012- & Brixton Pound, London, bers. The credit lines are secured by members 105 England, 2009- pledging assets. This ensures that the currency is asset-backed. When two members enter into - a transaction with both Swiss Francs and WIR - These two currencies are unusual in the level of Francs it reduces the amount of cash needed by institution support they have received. The Bris the buyer; the seller does not discount its prod tol Pound is the700 largest local alternative businesses currency in- uct or service. The use of this currency results in the United Kingdom with more than 1,200 users. increased sales, cash flow and profits for qualified Currently, over have re participants. - ceived Bristol Pounds and over 450 have signed assets of 5.03 billion CHF up for online accounts. The currency is so well ($5.15In June billion2015, the WIR Bank Association an - nounced that it held supported by local government that the city’s mayor announced he would106 take his £51,000 ), a historic high, driven by the con salary in Bristol Pounds.” tinued inflow of new money as well as constant109 customer demand for financing solutions.

32 | The UNO: A new complementary currency National Commonwealth Group Benefits of Complementary Currencies

Studies indicate that complementary currency initiatives have been shown to:

€€ Enhance economic efficiency. €€ Promote alternative social movements.

€€ Promote new forms of entrepreneurship. €€ Develop trust-based relationships, promote coop- eration, and strengthen existing networks. €€ Mitigate social exclusion and unemployment. €€ Organize emerging forms of non-profit activity, €€ Localize economies and improve resilience. and even public welfare, based on self-help and mutual assistance. €€ Build social capital, civic engagement and participation. €€ Support community development and promote special projects that represent a growth and €€ Promote sustainable consumption. enhancement of the commons.

These results are achieved through multiple specific mechanisms, including:

€€ Increased money supply, which increases demand €€ Giving business communities a way to create and stimulates local production and employment. their own mutual credit-clearing system to build economic resilience and self-fund €€ Increased money circulation. Local currencies community development programs. with demurrage tend to circulate much more rapidly and more frequently than national curren- €€ Allowing individuals, community groups and cies, resulting in far greater economic activity and businesses to bypass conventional credit benefit per unit than the national currency. channels. This offers access to an interest-free alternative source of capital. Where interest is €€ Additional purchasing power, which more applied, it circutlates back into the community. fully utilizes a community’s existing productive resources, especially unemployed labor, and €€ Providing a mechanism for communities to thus has a catalytic effect on the rest of the local finance social services, such as education, economy. As long as no more currency is created environmental and health services. than the local economy’s productive capacity can absorb, it is not inflationary. €€ Facilitating the circulation of goods and services among people who may not have €€ Encouraging the purchase of locally produced sufficient access to national currency but who and locally available goods and services. Thus it may have time and skills to offer. keeps money within the local community instead of being siphoned off to distant corporations.

For a more complete financial ecosystem based on a complementary currency, see https://commonwealthgroup.net/doc/CommonwealthDevelopmentOrganizations.pdf

National Commonwealth Group The UNO: A new complementary currency | 33 Endnotes

1. World Poverty Statistics, Statistic 11. History of the Alternative, Commu- Kumof, May 2015 Brain Research Institute, nity, Complementary and Digital 23. Sparkassen Banks, Wikipedia Currency Movements, Complemen- 2. Base of the Pyramid, Wikipedia tary Currency Resource Center 24. Bank of North Dakota, Wikipedia, 3. The Globe: Segmenting the Base 12. Frequent Flier Miles Soar Above 25. Colorado Public Banking of the Pyramid, Harvard Business Sterling, A. Clark, 2005 Review, V. K. Rangan, M. Chu and D. 26. Greenbacks, Wikipedia Petkoski, June 2011 13. Complementary currencies, B. Lietaer & G. Hallsmith, 2006 27. The German Sparkassen banks 4. The Fortune At The Bottom Of The (the rough counterpart to U.S. Pyramid, strategy+business 14. What is the Problem with our community banks but with a hybrid Current Money System?, B. Lietaer, public/non-profit ownership) are 5. The base of the pyramid: will 2010 extremely successful at recycling selling to the poor pay off?, M. profits back into their communi- Gunther, 2014 15. The Advantages of a Community ties. Sparkassen constitute approx- Currency, C. Fritzche, 2014 6. Integrating Very Poor Producers imately 40% of German banks and into Value Chains, D. Norell and M. 16. Money, Wikipedia lend to local small and mid-size Brand, World Vision/USAID, businesses, contributing greatly to 17. , Wikipedia Germany’s robust economy. 7. The Miracle of Microfinance? 18. Where Does Money Come From?, J. Evidence from a Randomized 28. BerkShares, Wikipedia Ryan-Collins, The New Evaluation, E. Duflo, A. Banerjee, Foundation, 2013 29. WIR Bank, Wikipedia R. Glennerster, C. G. Kinnanhttp, National Bureau of Economic Re- 19. Central Bank, Wikipedia 30. Bristol Pound search, 2013 20. Money creation in the modern 31. Local Exchange Trading System - 8. Basic Income, Wikipedia economy, Bank of England, Quar- LETS, Wikipedia terly Bulletin, 2014 Q1 9. Free money might be the best way 32. Chiemgauer, Wikipedia to end poverty, Washington Post, R. 21. Money creation in the modern 33. WIR Bank, Medienmitteilungen Bregman, Dec 29, 2013, (includes economy - Quarterly Bulletin arti- (press releases), 2017 link to longer version of the article), cle, YouTube, Mar 12, 2014 and his TED talk Why we should 34. This Startup Gives Poor People A give everyone a basic income, 2014 22. Banks are not intermediaries of Year’s Income, No Strings Attached, loanable funds — and why this 10. Complementary Currency, Wikipedia matters, Bank of England Work- ing Paper No. 529, Z. Jakab & M. 34 | The UNO: A new complementary currency National Commonwealth Group Huffington Post, N. Pitney, June 4, 49. Social Trade Organization, STRO 63. Free money might be the best way 2015 to end poverty, Washington Post, 50. Banking in the developing world R. Bregman, Dec 29, 2013, and a 35. Sacred Economics, Charles Eisen- - The poor are different, The Econo- longer version of the article here: stein, 2011 mist, J. P. London, 2012 Why we should give free money

36. Demurrage, Wikipedia 51. Mobile Banking in the Emerging to everyone, Dec 23, 2013, and World, New York Times, K. O’Brien, his TED talk on the subject Why 37. Non-government organizations – Nov 28, 2010 we should give everyone a basic NGOs, Wikipedia income, Oct 21, 2014 52. Mobile Banking and Payments, 38. Guaranteed Minimum Income, Berg Insight 64. Just Give Money To The Poor, Wikipedia Brooks World Poverty Institute, a 53. Mobile Banking in the Emerging presentation by A. Barrientos & D. 39. Mobile Banking in the Emerging World, New York Times, K. O’Brien, Hulme. See also Just Give Money World, New York Times, K. O’Brien, Nov 28, 2010 to the Poor: The Development Nov 28, 2010 Revolution from the Global South, 54. Mobile Phone Access Reaches 40. Filling the Gap: Mobile Banking in J. Hanlon & A. Barrientos, Apr 2010 Three Quarters of Planet’s Popula- the Developing World, Qualcomm. tion, The World Bank, 2012 65. Cash Transfers: A Review of the com, K. Bannan, 2013 Issues in India, , Uni- 55. Mobile Banking in the Emerging 41. Banking in the developing world versity of Bath, 2012 World, New York Times, K. O’Brien, - The poor are different, The Econo- Nov 28, 2010 66. Basic Income Grant (BIG) pilot proj- mist, J. P. London, 2012 ect in Otjivero - , Namibia 56. Mobile Money: Enabling Regulatory 42. Mobile Banking in the Develop- Solutions, GSMA, S. Di Castri, 2013 67. ReCivitas, Analytical Report of ing World, NYU Stern Economics Three Years of the Pilot project of Professor N. Economides and P. 57. Basic Income, Wikipedia Basic Income Guarantee in Quatin- Jeziorski of the UC Berkeley Haas 58. Paine, Wikipedia ga Velho School of Business, Dec 19, 2014

59. : With a new 68. Generating Skilled Self-Employ- 43. Access to Banking Services, Inter- foreword, “Social Security, Thomas ment In Developing Countries: Ex- national Monetary Fund, A. Demir- Paine, and the Spirit of America”, T. perimental Evidence From Uganda, guc-Kunt and L. Klapper, 2012 Paine & N. Altman, May 26, 2015 C. Blattman, N. Fiala & S. Martinez, 44. Remittances, Wikipedia Nov 2013 60. Guaranteed income’s moment in 45. Banking in the developing world the sun, Remapping Debate, M. 69. Building Women’s Economic and - The poor are different, The Econo- Alberti & K. C. Brown April 24, 2013 Social Empowerment Through En- mist, J. P. London, 2012 terprise - An Experimental Assess- 61. Basic Income Studies (BIS), Basic ment of the Women’s Income Gen- 46. Trends in Migration and Remittanc- Income Earth Network erating Support (WINGS) Program es, World Bank, 2017 in Uganda, C. Blattman, Columbia 62. For Fighting Poverty, Cash Is Sur- University, E. Green, Duke Univer- 47. Ibid prisingly Effective, Bloomberg.com, sity, J. Annan, International Rescue C. Kenny, June 3, 2013 48. Cyclos Online & Mobile Banking Committee & Harvard University, Software J. Jamison, Consumer Financial Protection Bureau, April 2013

National Commonwealth Group The UNO: A new complementary currency | 35 70. This Startup Gives Poor People A Income, Basic Income Network 94. Sacred Economics, Charles Eisen- Year’s Income, No Strings Attached, Earth, S. Jourdan, July 8, 2015 stein, 2011, page 207-208 Huffington Post, N. Pitney, June 4, 81. O’Dea says basic income ‘will eradi- 95. Ibid 2015 cate poverty’, The Sunday Times, S. 96. SpendBitcoins.com, Bitcoin accept- 71. Policy Brief: Impacts of Uncondi- McInerney, July 5, 2015 ing merchants listing tional Cash Transfers, Princeton 82. Basic Income Supplement: Testing University, J. Haushofer, J. Shapiro, 97. Bitcoin, Wikipedia a Dignified Approach to Income Oct 24, 2013 Security for Working-age Canadi- 98. Eco-Pesa: An Evaluation of a Com- 72. A Canadian City Once Eliminat- ans, Policy Resolution 97, National plementary Currency Programme ed Poverty And Nearly Everyone Women’s Liberal Commission, in Kenya’s Informal Settlements, Forgot About It, Huffington Post, Z. Liberal Party of Canada International Journal of Communi- Lum, Dec 23, 2014 ty Currency Research, W. Ruddick, 83. Priority Resolution: Creating a Basic 2012 73. Cutting out the middle men - The Annual Income to be Designed and most efficient way to spend money Implemented for a Fair Economy, 99. Eco-Pesa - unofficial brief, YouTube, on the homeless might be to give Policy Resolution 100, Liberal Party 2010 it to them, The Economist, Nov 4, of Canada (Prince Edward Island) 2010 100. Fureai Kippu, Community Currency 84. New Zealanders want to give ev- Knowledge Gateway 74. From ‘barely surviving’ to thriving: eryone a 'citizen's wage' and scrap Ontario basic income recipients benefits, The Independent, Mar 101. Banco Palmas, UCLG Committee report less stress, better health, 15, 2016 on Social Inclusion, Participatory Toronto Star, Feb 24, 2018 Democracy and Human Rights 85. Le Conseil Régional d’Aquitaine, 6 75. Is Finland’s basic universal income July 2015 102. Community Currency Progress in a solution to automation, fewer Latin America: Evolution in Brazil 86. A basic income for everybody!, A. jobs and lower wages?, The Guard- of a Socio-Technical Innovation for Kneepkens and J. Devillé, Panorama, ian, Feb 19 , 2017 Economic , Inter- Belgian National Television, 2014 national Journal of Community 76. Guaranteed Income for All? Swit- Currency Research, C. Place, 2011 87. Basic Income The Movie zerland’s Voters Say No Thanks R. 103. Ithaca Hours Minder, New York Times, 2016 88. New Money for a New World, S. Belgin & B. Lietaer, 2011 77. Swiss referendum leader discusses 104. Bristol Pound basic income, BEIN 89. The Wörgl Experiment: Austria 105. Brixton Pound (1932-1933) , B. Lietaer, 2010 78. The district that voted in favor of a 106. Mayor to Take Salary in Bristol basic income, Swissinfo.ch, 2016 90. Wörgl, Wikipedia Pounds, , S Morris, 2012 79. The French and Liberalism, Ifop 91. Bangla-Pesa, Grassroots Economics 107. WIR Bank poll for L’Opinion, Department Opinion and Corporate Strategies, 92. Bangla-Pesa - Empowering a Grass- 108. WIR Bank,Wikipedia F. Dabi & G. Marchal, May 2015, (In roots Economy, YouTube, 2013 French), p.12 109. WIR Bank, Medienmitteilungen 93. Bangla-Pesa Survey Results Feb- (press releases), 2015 80. 30 Dutch Municipalities show In- 2014 terest in Experimenting with Basic

36 | The UNO: A new complementary currency National Commonwealth Group