Local Money

Overview | How | Basis | Name | Backing | Limits | Implementation | Paper | Presentation | Risks | Benefits

Common good bank depositors will create and manage money at the community level. This local system will be seamlessly integrated with the official currency (for example the dollar), but nearly independent of the official currency. Insofar as we use local money, the bank business can operate as we would like an ideal bank to operate in an ideal world.

Initially the local money will take the form of credit only. Paper currency will come much later, if at all.

Each common good bank community will decide for itself, within reasonable limits, how much money to create and what to spend it on, for the common good. The common good bank will exchange locally-created money for dollars automatically -- elevating the local money to the same status as any national currency.

Our local money system will require no self-sacrifice, no conscious decisions and no extra work for anyone. In fact, just like for an international credit card purchase, the system will be effectively invisible to participants. Overall, this system can save a community of 5,000 people over a million dollars a year, automatically, effortlessly. Like magic.

1. How Can It Save Us Money. Using local money for local commerce frees our dollars for other things.
2. Basis. Our created money will be based on the stable, inflation-free value of some basic local commodities, benchmarked regularly against the dollar.
3. Name. Call this money "Common Goods" or just "Goods".
4. Backing. Issued and backed by participating depositors -- individuals, local government, businesses and organizations.
5. Limits. Each community can create money by spending and lending.
6. Implementation. Part of each credit transaction will be conducted in dollars and part in local money, with the bank adjusting the proportion automatically, as needed. The bank will also automatically exchange dollars for local money and local money for dollars, as needed.
7. Paper currency. No paper (or coin) currency will be introduced until the local credit money system is running well, and not for several years in any case.
8. Presentation. The bank will present all these unconventional features in a way that feels familiar and attractive to customers and acceptable to regulators.
9. Risks. Financial risks to the bank or to any participant are small and easily handled.
10. Benefits. Economic security and sustainable prosperity.