Parallel currencies are currencies that are issued by the state as an official second currency alongside legal tender currency and can also be designated as legal tender. A parallel currency can be a stable, hard currency (e.g., a foreign currency) that is used alongside a weak national currency, to combat hyperinflation in the national currency for example. On the other hand, a weak national currency can be used as a parallel currency in order to stimulate the national economy and to make the export economy more competitive again. In the literature (Hahn 1969) a distinction is often made between parallel currencies (with flexible exchange rates) and ‘double’ currencies (with a fixed exchange rate to the official first currency). Double currencies were widely used up until the 19th Century, particularly in the form of gold and silver coins or tokens, which were traded, calculated in and accepted against a fixed standard of value. In the years preceding the introduction of the Euro on 1 January 2002, national currencies were also tied as double currencies to the Euro exchange rate. Many economists see this in hindsight as a ‘birth defect’ of the Euro currency because when diversely efficient economies are tied together in a single currency zone the common currency is equally suboptimal for both strong and weak economies. Either the strong or the weak economy has to meet the common standards or becomes dependent on wealth transfers. (Frankel 1999, Jacobs 1984). The common currency zone is thus not an “optimal currency area”. On the other hand, with a national currency – or a parallel currency with a flexible exchange rate or one tied to a prescribed ‘devaluation spectrum’ exchange rate – each state can, through targeted monetary policies, influence both its domestic and foreign economy and thus free itself from dependence on both wealth transfers and exports. During his time as finance minister in the German government, Oskar Lafontaine argued for keeping the East German currency Ostmark as a parallel currency to the Deutschmark in the wake of German reunification in 1989. His intention was to prevent the ‘structurally weak’ new German states from being bled dry and to enable them to carefully match the competitive market conditions of the West but he was not able to realize his proposal. Long before the introduction of the Euro there were also official discussions about first introducing the ECU as a parallel currency to the national currencies of the European Economic Community (Graumann 1979). Not long after the introduction of the Euro this topic also flared up again briefly in some non-parliamentary circles, for example in Britain (Boyle 2003). In several South American countries the US Dollar is used as a parallel currency to the national currency. Cuba first stopped using its US dollar-backed parallel currency “Peso Convertiible”in 2015. In the summer of 2009, Gov. Arnold Schwarzenegger went back to the idea of state bonds, so-called IOUs, as a parallel currency for the state of California, in order to bridge a liquidity crisis. Finally, parallel currencies have often been mentioned in discussions following the Euro crisis, especially for Greece. According to a study by the Swiss bank UBS, the finance markets reckon controls on movement of capital and the introduction of a state-issued parallel currency on the basis of future tax credits (IOUs) is one of four realistic future scenarios for Greece – provided there is no ‘Grexit’ or state bankruptcy. A talk by the former chief economist of Deutsche Bank, Thomas Mayer, caused a furore when he talked about the “Geuro”. MONNETA associates have also made their own proposals (Schuster/Kennedy, 2011 and Gelleri, 2012). Even the former Greek Finance Minister Varoufakis had published his own idea for a parallel currency (FT-Coins) based on tax credits and the new blockchain technology pioneered by Bitcoin before he came into office. On 1 April 2015 he jokingly announced its actual introduction. Well over 30 different proposals for parallel currencies for Greece and the Eurozone are currently known, as MONNETA expert Ludwig Schuster discovered in his research for a study for the German National Association of SMEs (BVMW). Proposals for parallel currencies come from the most diverse economic and political perspectives and are sometimes drastically different in their motives – “what is the purpose and who should be helped by it?” – but also in their concrete proposals. Despite this diversity, the proponents agree on one thing, that in the face of the most diverse economic conditions in the member states of Europe parallel currencies can be a means for economic self-help and ‘catch-up’ development. According to the signatories of a joint declaration on parallel currencies, they are fundamentally united in their goal of strengthening the domestic economic foundations of individual member states and stabilizing the common currency and economic area.

Related literature

BVMW Sammelband (2013): Die Parallelwährung. (PDF)

Frankel, J. A (1999): No Single Currency Regime is Right for All Countries or at All Times, Essays in International Finance No. 215, Princeton.

Gelleri, C und Mayer, T (2012): Expressgeld statt Euroaustritt. Gelleri, C (2015): Parallelwährung für Griechenland, INWO.

Graumann, D (1979): Die Parallelwährung als Europäische Integrationsalternative.

Hahn, H (1969): Geld- und Währungsrecht, München.

Jacobs, J (1984): Cities and the Wealth of Nations, New York.

Schuster, L und M. Kennedy (2011): Mit einer Komplementärwährung kann Griechenland abwerten und in der Euro-Zone bleiben, ZfSÖ 170/171.(PDF)

Schuster, L (2014): Parallel Currencies for the Eurozone. An outline and an attempt at systemization. Veblen Institute. (PDF)

Vaubel, R (1990) Currency Competition and European Monetary Integration, In: The Economic Journal, Vol. 100, No. 402, pp 936-946.

Further Weblinks

MONNETA Aufruf: Ja zu einer Parallelwährung für Griechenland, 2012 Ludwig Schuster, Vortrag bei Ergänzungsveranstaltung zur VfS Jahrestagung in Göttingen, 2012 (PDF-Präsentation, Youtube Video)

Ludwig Schuster, Vortrag bei Veblen Institut, Paris, 2013 (PDF-Präsentation)


The American philosopher Charles Eisenstein has popularized the idea of ‘living in the gift’. This means a culture in which people share with each other without expecting something in return. Large areas of our lives only work through the gift economy: most work done in families works on the principle of the ‘gift economy’, for example parents work hard to bring up their children. Without trust in a self-evident but mostly unconscious gift economy as the basis of society, our economy could hardly function. The people who argue most to apply this idea to other areas of society are those who want to distance themselves from an egoistic, consumer-oriented, capitalist market economy. It is an attempt to create an alternative to the increasing ‘economization’ of life, one based on human values. Activists for the Gift Economy want to change the underlying philosophy of the financial economy. Why, they ask, should goods and services always be given in expectation of a service in return? Is it not possible to create an economic order based on unconditional giving? If everyone gave their services freely and simultaneously received from others, wouldn’t everyone get what they needed? Critics argue that in today’s throw-away culture of western capitalism there are always spare goods and services that could easily be given away but are usually thrown away, which would seem to suggest that a gift economy is not currently functioning. How should a gift economy work in a situation of scarcity? There are people who have turned this approach into a way of life and live completely without money, such as Heidemarie Schwermer. Another clear trend that has established itself, particularly since the worldwide financial crisis, is the Sharing Economy or Collaborative Economy. Many different platforms and companies are working with this concept. The often quoted main idea is to make underused resources available to a wider public through the use of information technology: accommodation, transport, tools, services – all kinds of products and services can be shared. However, complementary currencies, micro-finance and direct credit (peer- to- peer lending) are also often counted within the Sharing Economy. This Economy of Sharing indeed looks at first sight as though it is led by values of solidarity and cooperation but is just as often criticized for being captured by commercial forces. The idea first stood for sharing tools, vehicles or rooms that one was not using but out of this idea have grown completely commercial business models: renters ‘share’ unused rooms with tourists through “Air B n’ B”, car owners ‘share’ their journeys with people seeking lifts through “Uber”. Apart from these two well known clearly profit-oriented examples there are many others that are keeping the spirit of the sharing economy alive: Car sharing firms allow non car owners to be able to use cars and replace eight privately owned cars with one shared car. In urban communal gardens hobby gardeners happily share ground, tools, jobs and often also the harvest. In the ‘community supported agriculture’ movement one group (of usually 100-200 people) shares the living costs of the farmer: the group collectively decides what is to be grown and pays the farmer’s wages; he or she plants, looks after and shares the harvest with the group members – the risk is also shared and people undertake full responsibility for each other and for good nutrition. One important platform in this area is “Ouishare”.

All loyalty points systems such as Air Miles, Nectar Points etc. aim to persuade customers to remain loyal to a particular company. Customers of a particular company collect points, which they can exchange for discounts with the issuing company or its partners. Points can be in electronic or paper voucher form. These so-called private corporate currencies are mostly redeemed directly with the issuing company and cannot be transferred for use outside of that economic circuit. Companies gain valuable data about their customers and can decide which products are redeemable for points whilst minimizing the ‘opportunity costs’ of issuing points.

American Express Air Miles



The invented German word ‘Regiogeld’ is an abbreviation for the concept of ‘regional money’, a local medium of exchange similar to the Euro. Its main difference to the Euro is it is only valid in one region, which is usually designated by the name of the local initiative: Chiemgauer, Havelblüte, Elbtaler, Vorarlberger Talente.

In the German speaking world, the term has become well known mainly through the efforts of leading initiatives such as Chiemgauer in Bavaria and the national organization Regiogeld e.V. , which guarantee quality standards. In a broader sense, the term Regiogeld has become known internationally to mean complementary currencies that restrict themselves to one region.

Regiogeld is not intended to replace the Euro but to complement it. It is often issued in the form of vouchers but also increasingly administered through electronic accounts. It serves to promote an ‘economics of the common good’ in regions by:

  • Keeping purchasing power in the region, which promotes regional businesses and stimulates regional economic circulation

  • Extending the commercial possibilities of a regional market and being used as a tool for regional development

  • Promoting the sale of regional products, enabling higher turnover and creating jobs

  • Shortening transport routes (‘food miles’) and thus promoting a more environmentally-friendly mode of economics.

Regiogeld is interesting for local communities and local authorities because they can experiment with it directly for themselves without needing to wait for ‘big politics’ to get involved. As small ‘currency areas’ seem at first glance to be outmoded (“But we deliberately introduced the Euro for the whole of Europe!”), Regiogeld quickly ignites discussions about money and economy. Thus Regiogeld promotes awareness of economic connections and the realization that money is a design tool that people can use to design new communal possibilities for themselves.

Money creation: how regional currencies are issued

In order to circulate well, a regional currency needs a critical mass of users across all sectors: citizens, businesses, voluntary organizations and local government. The bigger and more diverse the user group, the more probable it is that goods and services will find takers who will also accept Regiogeld. In Germany, there are two main ways in which regional money is created:

1. By exchanging national currency (“Euro-backed”): Users buy regional currency with national currency in order to be able to pay with regional currency at participating businesses. Businesses may change the regional currency they have received back into national currency at any time (in some cases paying a fee, which in the case of Chiemgauer is used to benefit local voluntary groups and projects). This model is used internationally, for example by BerkShares in the USA and the English “Transition Currencies” such as Brixton and Bristol Pound.

2. Backed by the promise of future goods and services (“service-backed”): Issuers of the currency estimate the value of services promised by the participants and how much regional currency should be issued into circulation and then actively support the circulation of the currency. Examples in Germany include Urstromtaler, Elbtaler and Lausitzer. Internationally for example Ithaca HOURS and Equal Dollars in the USA are issued in this way. There are also other ways of issuing regional currencies such as Community Way from Canada.

More information about Regiogeld and Regiogeld initiatives:

For an overview of the variety of regional currencies and profiles of leading systems worldwide: “People Money – the Promise of Regional Currencies”.

People who want to make a contribution to reforming the financial or money system are often recommended to move their money to another bank or to include ethical criteria in their choice of investment. The anti-globalisation network Attac has been calling for some time now for people to change banks: instead of purely commercial banks people should choose banks like the GLS (Cooperative Bank), Umweltbank (Environment Bank), Triodos or other local banks like the Sparkasse or the cooperatively organised Volks or Raiffeisen banks.



Virtual currencies only exist in online ‘worlds’ and games. They have no physical form and cannot be used outside of these spaces. Some online gaming worlds like “Second Life” issue currencies. Players buy this currency with national currency. They can only use this currency to use, exchange or buy virtual objects for use in the gaming world. The terms ‘virtual’, ‘digital’ and ‘electronic’ currency are often used interchangeably but most conventional money today also only exists in digital form, stored electronically in computers, thus these terms are not very useful when they are so vaguely defined. Another group of currencies that are also often confused with virtual or digital currencies are crypto-currencies. The payment systems, security and management of these currencies are organized through a decentralized computer protocol that guards against counterfeiting through cryptographic signatures. However, even this description does not tell us very much about the idiosyncrasies and unique approaches of many of these new currency projects. The best known example of a virtual or crypto-currency is Bitcoin. It was the first currency to establish an international online payment system without banks as intermediaries and guarantors. It uses the so-called ‘blockchain’ technology, a kind of decentralized database that allows the history and authenticity of each transaction to be checked without going through a hierarchy. This technology and the success of Bitcoin has inspired many imitators such as Namecoin, Litecoin, Ripple, Faircoin etc. Some of these currencies can already be used to buy goods and services worldwide. Both types of currency were dealt with in the report of the European Central Bank “Virtual Currency Schemes”:

Islamic Banking describes banking business according to Islamic, Sharia principles. Peculiarities of banking based on the Koran include not only a ban on charging interest but also the avoidance of speculative business and unethical investments of clients’ money such as in alcohol, tobacco and pornography. Islamic Banking thus includes on the one hand the issuance of interest-free credit and on the other hand the pursuit of investment and finance products that indeed bring a profit but do not promise any risk-free interest on the investment. Extended credit is also not available if a bank has to add interest charges on top. In order to get around this, Islamic Banks first of all acquire financeable objects like houses themselves and then sell them on in exchange for a markup on the profit. In Great Britain, the Islamic Bank of Britain was the first bank based on Islamic principles to open its doors in September 2004 (Study by Mark Anielski, PDF). In 2012, the first Sharia-based finance products were offered by an asset manager in Germany (Report on German radio). The first Sharia-based bank to receive a banking licence for the German market from the German finance ministry in March 2015 was the Kuveyt Türk Bank AG, according to media reports such as in the ZEIT.

States have had varying degrees of influence in different times and places over how banks create money.

In some periods, money creation and the denomination of coins was left completely to the commercial banks. In such times when individual banks had the power to issue their own banknotes one speaks of “Free Banking”. The market alone exercises control over the total amount of money in circulation and over deposits backed by cash, central bank money or gold reserves. Deposits of money created by private banks were not protected by state guarantees against bank insolvency as they are today.

Some supporters of Free Banking either saw absolutely no useful role for central banks or recommended a permanent limitation of central bank money. This would mean that this highest monetary institution could give no credit and there would be no protection for cash and sight deposits by the state. These supporters include Friedrich Hayek and other representatives of the Austrian School of Economics.

Some countries had, above all in the 19th century, periods of relatively unregulated money creation by private banks. However, states often intervened after local banking crises. Legal tender currencies are the only official medium of exchange today and Free Banking is currently not practiced in any country. It is debatable whether or not complementary currencies on the one hand and so-called ‘shadow banks’ on the other hand also demonstrate today some of the qualities of such a liberal money creation regime.

Related Weblinks

Freebanking Blog

Theory of Free Banking

Modern Money Theory (MMT) essentially proposes an excessive and unlimited expansion of national debt in order to combat recession. Thus the economy can be re-stimulated at any time – in a Keynesian fashion – in order to avoid looming deflation and recession.

In contrast to the attitude of liberal and conservative economists, promoters of this approach see no rational reasons to limit national debt and even no necessity ever to repay it. The state as the legitimate representative of the body politic may run up unlimited debts in service of its own national economy. As “employer of last resort”, it may thus pursue an active employment policy to create full employment during recessionary times, without endangering monetary stability. The supporters of MMT also point out that the danger of inflation can be avoided because through its activities the state makes or increases its investments, which results in a sustainable backing for the increased money supply through increased GDP. Thus the balance between the quantity of money and the quantity of goods would always be maintained and prices remain stable. Additionally, it is precisely these net investments by the state that make an increase in productive capacities possible. Only when the economy is working at full production capacity is caution necessary before increasing the money supply again – then an increase in national debt is only permissible in proportion to the estimated potential for growth of the economy in question. According to MMT theory and its supporters, because the state is anyhow not obliged to pay off its debts, the resulting interest repayments are hardly a problem – because the state can naturally always go deeper into debt to pay off the interest. The resulting redistributive effects are not discussed within MMT theory. One of the best known promoters of Modern Monetary Theory is Prof. Michael Hudson, who writes a comprehensive blog on this topic.

The Economy for the Common Good – an economic model with a future – is both an idea and a movement that wishes, through a democratic, participatory and open-ended process, to establish an economic system in which the common good has the highest priority. Money and economy should be the means to an end rather than ends in themselves.

Underlying values:

  • Human dignity

  • Solidarity

  • Participation and transparency

  • Social justice

  • Ecological sustainability

Guiding principles:

  • The Economy for the Common Good (ECG) strives towards an ethical market economy designed to increase the quality of life for all and not to increase the wealth of a few.

  • The ECG helps promote the values of human dignity, human rights and ecological responsibility into day-to-day business practice.

  • The Common Good Matrix indicates to what extent these values are put into practice in a company. The Matrix is being continually improved upon in an open, democratic process.

  • The Matrix provides the basis for companies to create a Common Good Balance Sheet. The Common Good Report then describes how a company has implemented these universal values and looks at areas in need of improvement. The report and the balance sheet are externally audited and then published. As a result, a company’s contribution to the Common Good is made available to the public and all stakeholders.

  • Common Good companies benefit in the marketplace through consumer choice, cooperation partners and common-good-oriented lending institutions.

  • To offset higher costs resulting from ethical, social and ecological activities, Common Good companies should benefit from tax breaks, easier bank loans, public grants and contracts.

  • Business profits serve to strengthen and stabilize a company and to ensure the income of owners and employees over the long term. Profits should not, however, serve the interests of external investors. This allows entrepreneurs more flexibility to work for the Common Good and frees them from the pressure of maximizing the return on investment.

  • Another result is that companies are no longer forced to expand and grow. This opens up a myriad of new opportunities to design businesses to improve the quality of life and help safeguard the natural world. Mutual appreciation, fairness, creativity and cooperation can thrive better in such a working environment.

  • Reducing income inequality is mandatory in order to assure everyone equal economic and political opportunities.

  • The Economy for the Common Good movement invites you to take part in recreating an economy based on these values. All our ideas about creating an ethical and sustainable economic order are developed in an open, democratic process, voted upon by the people and enshrined in our constitutions.

The strategy:

At the societal level, the movement for an economy for the common good is an initiative for changing consciousness for systemic change based on mutual, respectful action by as many people as possible. The movement gives people hope and courage and seeks to network and cross-fertilise with other alternative initiatives.

At the political level, the movement for an economy for the common good seeks to achieve legal changes. The goal of engagement is a good life for all living beings and the planet, supported by an economic system oriented towards the common good. Human dignity, global fairness and solidarity, ecological sustainability, social justice and democratic participation are the most essential elements in this process. The necessary changes should be introduced ‘bottom up’ through economic conventions.

At the economic level, the economy for the common good is an alternative that can be experienced and practically implemented by companies of various sizes and legal status. The purpose of economic activity and the assessment of a company’s success are defined by using common good oriented values. In the Common Good Balance Sheet seventeen separate indicators are allocated to the core values in order to capture, evaluate and compare the common good orientation of companies, individuals and communities. The results are checked and presented by external auditors in the form of a detailed Common Good Report and the Common Good Balance Sheet, which summarises the results of the report in the form of a Common Good Matrix on one page.

The idea of the common good economy promises economic benefits for organizations and firms with a Common Good Balance through for example:

  • Tax relief

  • Better loan conditions e.g. from the specially created Bank für Gemeinwohl (Bank for the Common Good) and other ethical and ecological banks
  • Passing on of price advantages in the Association for Common Good Enterprises.

The Currency for the Common Good:

Within the Common Good movement there are ongoing discussions about establishing its own ‘common good currency‘. The Common Good Currency Company was established and officially confirmed by the general assembly on 5 April 2014. Contact person: Roland Wiedemeyer.

History of the idea:

The idea of the Common Good Economy goes back to the year 2001, when Joachim Sikora and Günter Hoffmann proposed the “vision of an economy for the common good” based on a regional currency with a circulation incentive, a performance-based citizens’ income and land reform. In the last chapter of his 2008 book “Neue Werte für die Wirtschaft” (New Values for the Economy) Christian Felber drew a rough sketch for a new economic order. About a dozen entrepreneurs were attracted by the idea and offered to help the author refine the rough sketch and get involved in its implementation. The group pondered over the model for nearly two years until the first ‘energy field’ (working group) was started in May 2010 and in August 2010 the Economy for the Common Good was born. A not-for-profit association was founded in 2011. More on the history here.