SOCIAL AND COMPLEMENTARY CURRENCIES (SCCs) AS A TOOL TO STRENGTHEN SUSTAINABLE DEVELOPMENT

The current world is going through a number of challenges in terms of sustainability.  The climate change, the increase of ageing world population and that of consumption of natural resources are just a few subjects in which our current civilisation is at stake, forcing us to change the way we live our lives to allow future generations to enjoy at least the same life quality.    Little attention if any is paid, however, to the fact that our monetary system is not designed to be sustainable, which means that we are obliged to end up with facing with economic crises sooner or later.  The legal tenders are usually regarded as an indispensable tool for us to live such an advanced economy, but the way they are currently issued as bank credit requires borrowers to repay not only the principals but also the compound interest which grows exponentially, and such a system can only last when there is more and more money injected into the economy, indebting the society furthermore.  While sustainable development is defined as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” (United Nations, 1987), it is unfortunately little known that our very currency system today is incompatible with this sort of development, especially by incrementing permanently the debts in the society, discounting future assets and redistributing the wealth for the rich.      This article begins with analysing five unsustainable features of our current monetary system according to Lietaer et al (2012), questioning the status quo in which money is issued as bank credit and its creation is at the mercy of private banks whose primary goal is to maximise profits and not to pump out enough money supply into the whole economy, with the compound interest rate which forces every economy to grow exponentially and increases the income gap, and whereby the social capital is eroded.  Then necessary features are indicated to solve such problems, with special focus on demurrage, a monetary reform suggested by Gesell (1916) to put a penalty fee for those who hoard money.     Then different SCCs are classified according to their typology and based on the collateral, such as those backed with official tenders, with other goods and/or services or tax payment, those based with users’ mutual trust, those issued as bank credit but under different criteria, and fiat currencies, with explanations on their advantages and sometimes disadvantages as well.  And finally, examples are given to prove that SCCs can contribute to the sustainable development.