Germans turn to alternative money

Idea behind local currencies is to get people to buy local and support regions

LOCAL MONEY: There is around $593,000 worth of 16 different alternative currencies, such as the Berliner (above), in circulation in Germany. -- AP

BERLIN - TO THE untrained eye, the middle-aged woman is just buying groceries. Take a closer look, though, and Ms Vera Schmidt will tell you she is taking a stand against globalisation.

Like a growing number of Germans, she pays for her groceries, her daily cup of coffee and even her haircut not in euros but in an alternative currency - the Berliner.

Its use is not intended to undermine the euro, the common European currency introduced five years ago, but to encourage people to shop locally and support their region.

'We prevent the flow of money out of the region to China or Taiwan,' said Mr Frank Jansky, spokesman for the recently founded Regional Money Authority.

The principle is simple: A customer buys the local currency at a 1:1 exchange rate.

They buy their fruit and vegetables in this currency, which is then used by the shopkeeper to buy produce from a local supplier.

It comes, then, as little surprise to hear that, like many local currencies, the Berliner was established by the city's 'Green League'.

'The stronger the regional economy is, the shorter the transport distances,' said Mr Ralf Becker of the Green League. Shorter distances lower the amount of environmentally-unfriendly exhaust fumes produced.

The Berliner is not a one-off but is one of 15 regional alternative currencies that have sprung up in Germany in the last few years.

In Bavaria, there are the Sterntaler and the Chiemgauer. In Hamburg, it is the Hansemark, and the Carlo in Karlsruhe.

Another 35 are on the way.

The currencies all look different, are not exchangeable and have their own rules.

Many, for instance, lose a small percentage of their value every month to encourage people to spend the money quickly.

The 'lost' percentage doesn't go to waste though; it is donated to local charities.

Officially, the whole business of 'Nebengeld' - alternative currencies - is forbidden by German law. But the German Bundesbank has decided to treat the currencies more as vouchers than a competitor for the euro, as the volume of trade involved is so low.

An estimated S$593,000 worth of alternative currencies are in circulation in Germany compared to the S$295billion worth of euro bank notes and coins issued by the Bundesbank annually.

Out of curiosity, the Bundesbank commissioned its own study into the phenomenon - last seen at this level during the 1930s depression, and the subject of a long-running project in the Christiania alternative community in the Danish capital, Copenhagen.

The Bundesbank study criticised the 'depreciation money' concept, saying the economic theory behind it - dating back to the 1920s - was flawed. But the report said that although the economies of the alternative currencies were flawed, they still had some merit.

'These currencies offer a chance for the holder to demonstratively support the local region and to make a statement against globalisation,' the reports' authors said.

Other studies in Berlin and Bavaria confirm the positive effects the currencies have on a region, encouraging customers to frequent small local shops instead of larger chains in supermarkets.

The money also has a higher turnover. One study shows that one Chiemgauer is exchanged 20 times a year, compared to 10 times a year for a euro.

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'These currencies offer a chance for the holder to demonstratively support the local region and to make a statement against globalisation.'
A BUNDESBANK STUDY

A customer buys the local currency with euro at a 1:1 exchange rate. He buys food with the currency, which is then used by the shopkeeper to buy produce from local suppliers. The currency is good for use only within the region.

There are now 15 regional currencies in Germany, with another 35 on the way.