Community Currency as Means Toward Conquering Deflation

ABSTRACT

The current deflation is a phenomenon has manifested itself in the lagging speed of currency circulation. Though the Bank of Japan is implementing various measures to accelerate the circulation of currency in order to overcome this deflation, no extraordinary effects have as of yet been seen.

Thus, in an alternate means toward this purpose, there is an increasingly active movement to issue independent currencies at the private level, and to circulate cash within the prescribed boundaries of a community. The point system, community credit, and the mechanism of community bonds are some examples. The effect of these systems is to cut off the bad influences coming from outside, and invigorate the economy of the community.

Historically speaking, the creation of currency communities through the issuing of independent notes was a frequent response to major depressions. The importance for a community, moreover, in having an independent currency apart from the legal currency can be logically supported.

Currently, in Japan, currency communities are occurring sporadically and piecemeal. Going forward, however, the question of whether these different parts will begin to move in a unified direction will become the point of focus. If this trend becomes a large social movement, it is possible that the very nature of the present currency system will have to be fundamentally re-examined. From this point of view, community currency is not simply a phenomenon that has arisen in response to deflation, but, dependent upon its development in the near future, is a system that has the potential to create a very large socio-economic impact.