What is this, a joke? Or perhaps a provocation by opponents of the new single European currency, outraged by its uncontrollable rise against the dollar? Neither one nor the other. It is all absolutely serious. According to the plan of local district initiators from East Berlin, the new means of payment, which they loudly call a regional currency, should strengthen the purchasing power of residents of a particular district of the German capital. The benefit from this strengthening is received by local small firms and individual sellers – in short, representatives of the local economy in the area of Kollwitzplatz.
As one of the initiators of the unusual financial project, Alexander Voitas, assures, already about 20% of retail outlets in the area of the Eberswalder Strasse metro accept the new regional currency "Berliner" as payment. Another 60 small trading firms scattered across the capital and the surrounding state of Brandenburg have shown interest in the "currency" and are also ready to accept "Berliners" in their stores instead of euros. Exchange offices have already appeared in the German capital, where any Berliner or visitor can exchange their legal euros for new, but also legal local "Berliners".
A rather solid base has been laid for this endeavor. The local currency will most likely be printed in the near future at the federal printing house – the very one where the euro was and is printed. Negotiations on this are not yet complete, but when the prototypes of the new banknotes in denominations of 1, 5, and 10 "Berliners" were presented to the public this summer, it was announced that they were all printed exactly there.
The idea of creating an alternative regional currency arose among local entrepreneurs several years ago. According to the head of the working group on regional currency issues, Klaus Starke, there are currently ten different banknotes replacing the euro in Germany. All of them have appeared in the last three years. In 2003 alone – seven. Since then, another about fifty similar initiatives have emerged.
All these private initiatives to issue local currency notes began, of course, not from a good life. An economics expert and one of the authors of the "Berliner" project, Alexander Voitas, directly says that the poor economic situation in Germany creates favorable ground for local currencies replacing the euro.
This is largely explained by the overvalued euro exchange rate, which makes it increasingly difficult for the country to export its goods. Enterprises are closing – witness the high-profile layoffs at Volkswagen. In this situation, it becomes increasingly difficult for unemployed and underprivileged citizens to find work on their own and to obtain bank loans for small and medium-sized projects – German and foreign banks demand serious guarantees even for small loans.
It is impossible to change the situation at the national level – this would violate monetary discipline, which, like the euro exchange rate, is the competence of the supranational European Central Bank. Therefore, conditions that would allow underprivileged citizens to have financial guarantees for banks were decided to be created at the regional level – this is the main meaning of grassroots initiatives to create local currency notes.
By using the local currency, which is mostly exchanged for euros at one to one, residents of German cities and municipalities are thus trying to protect regional economies from the negative influence of the unstable world financial market. Germans exchange euros for local money and use it for a long time. For example, the "Berliner" after almost six months of its use on the local market must be exchanged for euros – as prescribed by the instruction of the Federal Bank. Upon reverse exchange into euros, the "Berliner" loses 5% of its value. Whoever exchanges more than 50 euros at a time into "Berliners" receives a 2% premium.
It seems the Germans are mastering this scheme even faster than economists explain it. It turns out that, for example, in the East German state of Saxony-Anhalt, you can make purchases with local money called "Urstromtaler". In the town of Witzenhausen in Hesse, they use their local currency called "Kirschblüte". And in Bavarian Ainring, you can pay in stores with "Sterntaler".
Behind all these regional projects are private initiatives that have been supported by various associations and unions that have concluded cooperation agreements among themselves. However, what was planned as a regional idea is gradually turning into supra-regional competition. As the German newspaper Frankfurter Allgemeine found out, local currency can be used to buy goods in stores not only in the city of Kiel (the capital of the state of Schleswig-Holstein), but also in Dresden and Berlin. Three smaller local currencies are already competing with the capital's currency, the "Berliner". In particular, the Brandenburg state currency "Haveltaler" is enjoying success among the population.
According to experts, the idea of regional money is made so attractive precisely by the idea of joint use of money. Whoever buys radishes at the market or gets a haircut at a local hairdresser with local money is thereby supporting their associations and unions, as well as projects in their home region. Everyone knows about this. In the usual case, 3 out of the 5% withdrawn upon the reverse exchange of "Berliner" into euros go to the account of the leading joint organization, and the remaining 2% go to finance the currency project itself. Meanwhile, the cash turnover of local currencies is not yet very large. Thus, the volume of the most widespread regional currency, the "Chiemgauer", does not exceed 20,000 euros.