Spent some time talking with some smart folks working on alternative currencies in SFO. Here's the conclusions from this conversation. Alternative currencies can do three things:
- Serve as a store of value. Presumably, this currency holds value better than existing currencies. In this way, it acts like an asset (land, etc) but is more fluid/granular to allow its use in transactions. Think gold and commodity backed currencies. A way to apply this approach to a resilient community is to combine it with a food reserve (a currency backed by food you can eat if things break down -- see the Mendo Credit Slip as an example of this).
- Enable a loyalty program. In short, these currencies entice people to do business with a favored group of individuals/companies. Think local/regional currencies or commodity currencies backed by locally produced products. This can be a powerful way to accelerate consumption of local goods (keep the supply limited, focus on superiority via quality/freshness, etc.)
- Jumpstart a local/virtual economy. Full cycles of transactions from producer to buyer and back again. This is very difficult to do. A good example of success is Austria's depression era Worgl. Why did it succeed? It made the Worgl important to both producers/retail and consumers. As in: the town that issued the Worgl accepted it as payment for taxes. It then launched infrastructure projects that paid the employees partly in Worgls.