Establish a Circulation System
At this point, you have chosen and objective, recruited a Leadership and a
Community Currency Team, and selected the various mechanisms that the
currency will need. The last step in designing a community currency is to
make sure that you have a complete system in place for circulation.
Circulation – the word itself implies a key consideration for this exercise.
To be successful as a medium of exchange, currency needs to travel
through the community in circles, also called closed loops. If you were an
electrical engineer, you’d be looking for a complete circuit. A simple
concept, but yet this is where a lot of community currencies have failed in
the past. They have neglected to close a complete circulation patterns,
and as a result, there are some people who start using it, a few businesses
perhaps, but it tends to “pool” in particular parts of the system (also called
“sinks”). Unless such sinks are managed appropriately, people who are
using the currency get frustrated, and the system tends to deteriorate.
Our money systems functions in cycles, and these cycles are partly
responsible for the multiplier effect that is so well known in economics.
When money circulates through a community, and is stored in banks for
future use, and the banks lend the money out to homeowners and
businesses, then the total value that is in use in the community is greater
than the absolute value that people feel they have, and the economy
expands.
Within these cycles, there are several important points, which involve
different people and organizations:
Households: Consumers, Employees, Savers, Investors
Firms: Businesses, Organizations, Producers, Service Providers,
Employers, Investors
Government: Taxes and Fees, Service Delivery, Employment Support
Banks and Financial Institutions: Savings, Investment, Loans
Professional and Wage Labor Markets: Labor Rates – Wages &
Salary Levels
Product and Service Markets: Raw Materials & Finished Products
When you are designing the system for circulation for a community
currency, you want to make sure that a full circle of key points are
involved in some way, so it can circulate successfully.
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