For the first time I have helped to design a currency! With LETS and Time banks, the currency model is pretty straight-forward mutual credit with minimum and maximum account limits. Then more often than not there is an issuing account which gradually runs out of control and they are running a fiat system more than a mutual credit.
The founder of the O-share had joined a cooperative cafe arising out of the Israeli protest movement of 2011 with the expressed intention of starting a currency. He literally built the bar and studio above in order to make it a community centre, and now he needed needed some form of governance that would prevent big egos from seizing control, especially in the formative stages. Value was to be measured in 'Community time' - like time, but productive together time and he hoped that others elsewhere might want to copy the brand and the software.
Once established he hoped to set up a reputable governance model. Most opposition, he thought would come from jealousy, and it could be overcome or silenced by inviting such people to play a managerial role. So I advised for now that he wield the web site access as his exclusive claim to power, but to allow an opportunity, if 2/3 of users were really unhappy, to change the rules and/or the ownership of the site.
He was against a mutual credit approach, in which half the users have negative balances at any one time, because he said "we don't want to send the message that people are in minus - everyone is sick of debt". Rather he wanted to emphasise the abundance of the money and give new members a gift. When I explained that that gift was inflationary if not recouped he said that was fine - running permaculture courses on the roof would pay back all the intial gifts before long.
Yes, I said, but there's no need at all for you to give or pretend to give anything for free except an empty account. The units received from the Permaculture course could be supporting any other activity if they weren't being used to recoup the initial gifts.
However by this time, the system was already issuing gifts to new accounts, and withdrawing those payments would be a little embarrassing.
At this point I had a revelation. I maintain that fiat and mutual credit systems are both fine as long as you don't mix them up. And I was clear about the distinctness of the two designs:
Fiat: the issuing authority spends currency into existence as a way of imposing its values on the economy, then taxes it back as a way of creating demand for the currency, and managing the quantity.
Mutual Credit: the users create and destroy credit between one another as they spend and earn.
But I realised that if you open every account with 100 units and you neither issue nor tax, then this exactly equivalent to moving the zero in mutual credit system and giving everyone a credit line of 100. The sum of all balances will be 100 per account (excepting the issuing account). Everyone starts with the same amount. All we had to do to make this system stable, and consistent without changing the rules was. - state that the money supply was fixed at 100 units per account. - Express that accounts should be restored to 100 before being closed / abandoned. So here are the rules that we worked out:
The brand is Creative Commons licence.
The software is built using open source tools.
The domain name and this web site are owned by xxx.
These rules govern all the accounts and transactions stored in this web site.
The founder can change the rules on this page at any time, but will notify all active members by email beforehand.
The governance of the project can be changed with a 60% majority in an online vote of all members where the voting period is at least a week OR with a 60% majority at the annual review, to which all members wlll be invited, around Jan 1st.
Membership is by invitation only, and may be revoked at any time if, in the opinion of the management, a breach of trust occurs.
Community minutes are an abstract unit of value with no official value in Shekels.
New accounts will be granted credit of 300, and should be restored, by the account holder if possible, to that amount before they are closed or abandoned
More Community minutes may be created by the governing body according to its discretion.
The governing body has the power to grant addition credit to certain members at its discretion.
Members holding Community minutes are free to give them to other members for any reason, disclosed or undisclosed.
All transactions are voluntary, since no-one is obliged to participate.
All payments will be visible to all participants
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