Currency Systems
Backed Currencies		Ithaca HOURS
LETS		National Currencies
ROCS		Time Dollars
Complementary Currencies

National Currency Systems

Benefits of the national currency model

National currencies

• fueled the industrial revolution;

• have proven flexible enough to be adopted by all countries (including "communist" ones), independent of political/historical context;

• have attracted sophisticated financial services and institutions; and

• are "legal tender for all debts public and private".

How national money is issued

National currencies

• are "fiat" currency--issued, managed and guaranteed by a central authority;

• and are created by bank debt:
  • "Debt money derives its value from its scarcity relative to its usefulness" (Jackson & McConnell Economics. Sydney: McGraw-Hill, 1988.).

National currency is measured in US$.

By virtue of the treaty signed after World War II at Bretton-Woods, New Hampshire (U.S.A.), all national currencies are mediated through the U.S. dollar. The agreement followed negotiations primarily between the United States and Britain, and provided for the convertibility of U.S. dollars into gold. In August of 1971, U.S. President Richard Nixon unilaterally reneged on the dollar-gold equivalence standard by "closing the gold window" when France and the United Kingdom requested such redemptions, inaugurating the current era of "floating" exchanges in which the values of each currency and of gold are determined autonomously by market forces.

National currency exchanges are negotiable.

Participants may negotiate the amount of national currency to be exchanged in any particular transaction: One hour of a service requiring extensive training, skill, and experience, or expensive equipment, or posing high risk, may justifiably be worth several hours of less demanding work.

By leaving it to the negotiating parties to settle on a price, one solves the problem of having to pre-determine the value of everyone's time and goods, as was attempted unsuccessfully under the Soviet planning system. Outside of very narrowly defined communities where it is generally accepted that everyone's time has equal value (retirement homes, for example, where Time Dollars are very popular), systems enforcing a certain exchange rate for everyone's time will chase away those people who are exceptionally talented, thorough, efficient and/or hardworking, by not providing reasonable value for their service.

Structural incentives in the national currency system

National currencies bear interest:

• creating structural competition between participants (see "The Eleventh Round") and

• encouraging short-term planning via "discounted cash flow" (see "The Short-Sighted Glasses").

How the national currency systems manage global money:

Each country has a Central Bank which regulates that nation's money supply. Central Banks may be privately-owned, government-owned, or of mixed private and public ownership. Global coordination occurs primarily through the Bank for International Settlements for the top 10 +1 Central Banks; and through the International Monetary Fund for the system as a whole.

Related Resources

• Visit the Bank for International Settlements and International Monetary Fund for official information about trade between national Central Banks

• The Central Banking Journal provides independent reporting and commentary on central banking

• Mark Bernkopf's Central Banking Resource Center is an extensive resource directory relating to national and multilateral financial institutions.

• There are several Central Banks on the Web, including eight of the eleven BIS members (Italy, Switzerland, and the Netherlands are not yet online):
  • Banque Nationale de Belgique (Belgium)

  • Banque du Canada/ Bank of Canada

  • Deutsche Bundesbank (Germany)

  • Bank of Japan

  • Sverige Riksbank (Sweden)

  • Bank of England

  • the U.S. Federal Reserve

• Forbes article questioning the future of national currencies

• Edward Flaherty's Economics page presents, among other pieces, an article on The 'Debt Virus' Fallacy, A Brief History of Central Banking in the United States, and a Federal Reserve FAQ

• The U.S. Federal Reserve Economic Database (FRED)

• The U.S. Federal Deposit Insurance Corporation (FDIC) page

• A Brief History of Interest, on the American Monetary Institute page

• The Statistical Agencies on the Internet site links to a variety of national and local government statistical databases.

• The U.S. Department of the Treasury

• An English version of an Italian article on Monetary Property and its Induced Value

You're also invited to take a look at how national currencies compare with other exchange media, or register and join our discussion of national currencies in The Money Conference.

The Money Conference

Join us in The Money Conference, where we're gathering to compare insights on all kinds of money systems--old, new, high- and low-tech, real or theoretical--and to synthesize from our shared experience wiser and more efficient models of exchange media. Sign up for Motet conferencing, then come on in and introduce yourself, or jump right to the national currency conversation.

The Money Conference

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