The Emergence of New Systems of Currency

ABSTRACT

In the past few years, internal currency has become a very active trend throughout the world. These are systems of currency that are detached from the legal currency and can only be used in a limited area or community. The purpose in issuing internal currency is to activate the reciprocal help activities and help stimulate the economy. There are three types of internal currency : the paper type, the general ledger type, and the account type (or in its advanced form, the IC card type).

There have been several new trends in Japan: an internal paper currency that, like legal currency, can be repeatedly circulated is being developed, more advanced IC cards have also been adopted, and a movement is underway to introduce a legal currency that combines all the functions of an internal currency. Moreover, point-based corporate money is now being tied to electronic currencies, and as a result, its functionality is extending beyond the boundaries of the company. In Japan, the emergence of each new internal currency is immediately followed by affiliations with other currencies and the formation of a consumer mass. If this trend continues to develop, it is possible that Japan will establish the pioneering models for internal currency.

Internal currency has the advantage of being exchanged through trusted mechanisms and among trusted members. A circle of trust is created by internal currency that mediates between consumers and producers, between consumers and retailers, and between the consumers themselves. If these mediations can succeed in fostering independent local industries, it is possible for internal currency to bring about the autonomous growth of the regions. Included in this circle of trust, moreover, are not just the resources and services within the market, but also those such as volunteer work that lie outside the market. If this type of community grows, it has the potential to give way to what could be called internal currency economic blocs.

Though internal currency fundamentally possesses such potential, for the time being, whether in the regional economies or in the corporate sector, it is simply supplementing the economic relationships established by legal currency. While the two currencies currently co-exist in this way, it is highly possible that internal currency will begin to replace some of the functions of legal currency in the future. The functionality of internal currency is worth our attention, if even for the singular reason that it has the ability to easily and flexibly form economic ties that legal currency cannot. This point alone demonstrates its potential for wide ranging applicability.