Local Money
Local Public Bank Accounts
After 100 years in the kitchen, local currency may finally come to the public table.
Based on the humble track record of CCs, we yield an appreciative yet critical reconsideration of how CC systems are implemented altogether and propose an approach that brushes CC concepts against the grain. Pool Money attempts to eliminate a rather long list of typical CC „flaws“ and to scoop the „true power of currencies“ attributable to the existence of a central bank function of that given currency (that evidently does not exist for most CCs). Most importantly and paradoxically, pool money attempts to implement money as a commons, since the commons capacity of money is currently impeded by ubiquitous enclosures as cash and in accounts in all mainstream and CC systems. Hence the pool metaphor.
The Pool Money concept does not create nominally alternative CCs. Instead, it effectively localizes national currency in closed (!) local currency account systems with public banks. Those local accounts would be implemented within the core banking systems similar to foreign currency accounts but with a transfer capacity limited to other accounts in the local pool. Up to that point, however, the system creates the mere basis of a local currency function that could also be instituted by other means. The transformative thrust of the system comes with the ownership of the bank by its area municipality. Given the required regulatory framework, the area municipality/local authority receives the right to use the capital collected in the pool to finance services that 1) correspond to democratic and sustainability objectives and 2) are paid out exclusively to service providers that are part of the pool.
While the accounting transactions of the individual pool accounts are based on standard accounting, the accounting practice differs for the area municipality. It has access to the total capital in the pool at all times (!), factually creating an endless money supply for the community because the total amount in the pool remains unchanged. Contrary to the accounting practice of extending the balance sheet when creating money, pool money is created by means of a short-circuit balance sheet. Instead of increasing the money supply, it massively increases the velocity of money in circulation.
The transformative impact of the pool money system is due to i) its capacity to fund any necessary local work and thus create jobs (according to transformative criteria), ii) to do so without increasing the local money supply with resulting tendencies for accumulation and social inequality and iii) to effectively create a local dual economy. The efficiency of the pool money system finally also depends on the size of the pool perimeter we would preliminarily set at around 100’000 inhabitants and the existence of local economic design strategies with sound economic impact analysis. Finally, the Pool Money concept may also contribute to the MMT debate with the twist of emphasising money velocity in a (strong) dual economy over money supply in a (non-sustainable) mainstream economy.