Money is not merely a piece of paper or a metal disc or an electronic digit but ‘in essence it is a social relationship’. Money is the promise to repay by one to another in a society. The promise is based upon trust. On a different note, Prof. Robertson said, “Money helps each member of the society to ensure that the means of enjoyment to which he has access, yield him the greatest amount of actual enjoyment which is within his reach.”

Money is used as medium of exchange. An individual also saves money setting aside a part of her earnings, deposits it in banks. The trust bestowed upon banks by its customers acts as stimulus to them to perform better. On the other hand, according to Prof. Friedman, “Saving in terms of money generates a sense of confidence among the consumers.” Money also generates freedom. It has a great psychological effect. Money acts as an important indicator and provides information about probable demand for commodities and supply of goods. It is the basis of the price mechanism, cost and revenue estimates and is the determinant of profit. Marshall commented: “Money is the pivot around which the whole economic science clusters.”

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Money flows like the life blood in the economic system. Research reveals that the bulk of today’s money supply is created and allocated by commercial banks in their role as providers of credit. Efficacy of the banking system depends much upon the credit landscape of banks. Estimates show that a large and increased share of present bank credit now goes to consumers for personal usage, e.g. purchase of flats, cars, shares or for higher education, etc. There is a paradigm shift in the bank credit scenario from manufacturing to personal loans implying policy changes of the banks on credit emphasis, from productive to speculative purposes.

This may result in higher incomes to banks but with associated risks. It is argued that this system is inherently unstable. Further, the use of money towards creation of national wealth thereby generating national income is getting vitiated. Kate Raworth in her book ‘Doughnut Economics – Seven Ways to Think Like a 21st Century Economist’, commented: “We live in a monoculture of money, one so familiar and established that – like fish that have never noticed the water – we are barely aware of it.” She said the design of money – how it is created, its characteristics and use – has great consequences. Raworth advocated that there are many options to redesign money.

Many different kinds of money can coexist, ‘with the potential to turn a monetary monoculture into a financial ecosystem.’ However, over recent years the complementary or community currencies play significant roles in many communities for specific purposes. A community currency has been designed intentionally to address specific social issues, for example to increase financial stability, reduce poverty and support environmental conservation. These currencies, though not legal tender, act as mediums of exchange. Raworth narrated in her book about one such community currency Bangla-Pesa, which was launched in March 2013 by Will Ruddick, an American community development specialist in a slum named ‘Bangladesh’ (not the country) near Mombasa, Kenya. “Ruddick’s understanding of money is profound. He sees money as a type of promise – as a fungible unit of trust. He is exploring old knowledge, of how, over tens of thousands of years, villagers learned to manage promises, to build trust and to take care of each other.”

The Kenyan government arrested Ruddick and five others fearing that the new currency was launched to dislodge Kenya’s official currency, the Shilling. But once it was established that Bangla-Pesa actually served to complement and not to challenge the Shilling, Ruddick and others were released. And instead, the government started supporting them to spread the scheme. This paper currency was launched in a network of about 200 business traders, majority being women – from bankers and fruit sellers to carpenters and tailors – members of the network. However, participation was voluntary. Once in the network, businesses are allowed to exchange their Bangla-Pesa vouchers for buying and selling their own goods and services.

No one is allowed to have more than 400 BanglaPesa at any one time. Bangla-Pesa meets basic needs like food, water etc. Thus, they can save the official currency which can be used for paying for other essentials. The majority people in the slum lived in poverty and were unable to meet their basic needs. Therefore, the goal was to use the currency to encourage economic activity, which in turn would help reduce poverty of the people who do not earn much conventional money to be able to buy food and other necessities. Where there are underutilised workers and underutilised resources, this community currency can play the role of a game changer.

The local market shall provide basic needs at local or community currency. Thriving communities can thus build their own prospering economies. It has been experienced that this has helped increase trust, sales revenue, job creation and food security in the community. Time-banking is another example of community currency where people exchange services with one another, using time as a unit of account. ‘Time credit’ is the currency one can earn for the hours they contribute to the community or to serve others in the form of baby-sitting, elder care-giving, gardening, tutoring etc. These credits can be used to pay for services from other members in future when needed. Time banking creates a sense of community development through mutual support and trust and ensures social connection with reciprocal exchange.

Invention of block chain technology combining data base and network technologies emerges as the decentralised platform for value exchanges among people in a closed group. This technology is immensely useful in developing and maintaining community currency. It records each transaction and stores it in each computer in the network in a secure manner. It acts as a transparent public ledger which cannot be altered or reversed or deleted. No one outside the network can have access to it and alter the data. Thus, there are no chances of fraud. Therefore, the participants can have absolute trust on the data.

Block chain technology remains as a critical component in various sectors including the financial sector. It can provide a complete closed network and a decentralised platform for design, development, delivery and maintenance of community currency. Creating a local currency gives broader insight into the local economy – how it works, how people respond and react to markets, and how money can reshape the local economy and lives of people in the community. Money is an invention that works only because a community stands behind it, willing to use it as medium of exchange for goods and services. Most official currencies, which are legal tenders, are creations of national governments that manage and back them.

But if a poorer community creates its own currency i.e. a ‘People Powered Money’ to foster social exchange it must have appreciation. The idea of community currency is no longer a marginal one. Community currencies have the potential to become an integral part of mainstream economic life. The central message is that money can really make a positive difference to our lives and genuinely can enrich and empower the communities in which we live and work. ‘Money is a tool; we can use it to our advantage.’

(The writer is a Cost Accountant who worked in a State power utility.)