Annual Report

The current White House’s administration also has been trying to simplify it all for borrowers with loans backed

Borrowers can expect savings, but the banks aren’t required to give them today’s rock-bottom rates. Under the settlement, the new rate must be at least 0.25 percentage point

  • One
  • Two
What is money?

What is money?

Most people tend to regard money as “a thing” because that is usually the way it appears to us (as paper, coins, checks, credit cards etc).  And yet, stranded on a desert island, we would...

Video of Tedx Talk in Berlin (November 2009)

Video of Tedx Talk in Berlin (November 2009)

Overview:  In this talk, Bernard explains that the current banking crisis is a structural crisis which requires a systemic solution.  Studies have shown that a natural ecosystem’s...

Managing the Banking Crisis

Managing the Banking Crisis

In this article, Bernard Lietaer, Robert Ulanowicz and Sally Goerner discuss the shortcomings of conventional approaches to managing banking crises (i.e. nationalization of problem assets), and...

Rethinking Money

Rethinking Money

How new currencies turn scarcity into prosperity Rethinking Money points out that there is a way, in fact a thousand ways, to stop our current juggernaut towards global...

What is money?

Most people tend to regard money as “a thing” because that is usually the way it appears to us (as paper, coins, checks, credit cards etc).  And yet, stranded on a desert island, we would quickly discover that while our knife remains useful as a knife, whatever cash or checks we carried would now be totally useless.  It would remain paper, but it would no longer be “money.”  For any “thing” to act as money, it requires a community to agree that a particular object has a certain value in an exchange.

Money can be defined as an agreement, within a community, to use something as a medium of exchange.  As an agreement, money lives in the same space as other social constructs like marriage or lease agreements.  These constructs are real, even if they only exist in people’s minds.  The money agreement can be made formally or informally, freely or by coercion, consciously or unconsciously.  Most of us do not consciously agree to use U.S. dollars, euros, or yens, for instance, nor do we consider their nature.  We just use them, unconsciously entering into an unspoken agreement with our banking system.   Any monetary agreement is only valid within a given community. Some monetary agreements are operational only among a small group of friends, like chips used in card games; for certain periods, like the cigarette medium of exchange among front-line soldiers during world war II; or within a larger community, like the citizens of one particular nation.   A community can be geographically disparate, such as Internet users, or can include large segments of the global community, as in the case of the U.S. dollar in its role as international reference currency.

The key function that transforms the chosen object into money is its role as medium of exchange.  There are other functions that today’s money tends to perform, such as unit of account, store of value, tool of speculation, and so on.   However, these other functions may be considered secondary, as there have been effective and functional currencies that did not perform some or any of these other roles.

In summary, the magic of money is bestowed on something as soon as a community can agree to use it as a medium of exchange.  Our money and monetary system are, therefore, not de facto realities like air or water, but are choices, like social contracts or business agreements.

“Money” is used throughout this work as a generic, overarching term.  Specific types of money are referred to by the term “currency.”   There are two general subcategories of currencies: national currencies and complementary currencies.  We are accustomed to considering only our national currencies as ‘real’ money.   However, national currencies have been designed for specific purposes only, and cannot fulfill certain social objectives (such as fostering trade and cooperation, or ecological sustainability). Some currencies already operational today or being proposed for the future are designed to fulfill such objectives, and operate best when they are used in tandem with the national currencies.

Why is it important to understand that money is not a thing, but an agreement?

If we regard money as a thing,  it becomes a given, and we lose our ability to change it in any way.  We are treating money as if it is God-given, like rain or the number of planets in the solar system.   But it is not a given.  If you don’t like the quality of rain, you cannot do much about it. If you don’t like your money system, on the other hand, you can do something about it.   When we understand that money is created by a set of understandings and practices, we can begin examining the terms of these agreements to see whether they actually serve our collective aspirations and objectives.  Currencies can be redesigned to better meet our needs.

Bernard Lietaer on the definition of money

Video of Tedx Talk in Berlin (November 2009)

Overview:  In this talk, Bernard explains that the current banking crisis is a structural crisis which requires a systemic solution.  Studies have shown that a natural ecosystem’s ability to thrive and flourish critically depends on its having the right balance between two key variables: efficiency and resilience.   This appears to be equally true for socio-economic systems.  Our monoculture approach to currencies may be very efficient, but it is not resilient and can crash easily.  And it has done so many times.   The study of national ecosystems also shows that diversity is a key factor of resilience.   And that is as true of our socio-economic systems as it is of our natural ecosystems.   The structural solution to our current crisis is to adopt a diversity of complementary currencies, i.e. currencies that circulate in parallel to national money, and that help connect untapped resources and unmet needs when national currencies fail to do so.   These complementary currencies can be started on any scale with great benefits and can play a very important role in helping to prevent unemployment.

Managing the Banking Crisis

In this article, Bernard Lietaer, Robert Ulanowicz and Sally Goerner discuss the shortcomings of conventional approaches to managing banking crises (i.e. nationalization of problem assets), and they explain why these typically fail to address systemic causes.   The authors argue that a better solution would involve the adoption of complementary currencies, and the government’s acceptance of these currencies in partial payment of taxes during a period when banks are not in a position to fully finance the real economy.

Rethinking Money

How new currencies turn scarcity into prosperity

rethinking money book cover

Rethinking Money points out that there is a way, in fact a thousand ways, to stop our current juggernaut towards global self-destruction. There is a system of solutions already in place in localities throughout the world where terrible problems have existed.  The changes came about, not through the redistribution of wealth, increased conventional taxation, bond measures or enlightened self-interest from corporate entities, but rather, by people simply rethinking the concept of money.  With that restructuring, everything changed.

Remedies for Government, Business and Entrepreneurship, NGOs and the Civil Society, and the private citizen are offered. The book also presents clear validation, speaking plainly and directly to general interest readers. This work promises to strike a deep chord with audiences eager to find meaningful, thought-provoking answers.

Go to the book website:


“Lietaer and Dunne describe the many thousands of innovative currencies in use by communities worldwide and how these currencies are facilitating the needed transition of human societies to more peaceful, sharing, prosperous, and sustainable futures.”

— Hazel Henderson, President, Ethical Markets Media (USA and Brazil), and author of Ethical MarketsPlanetary Citizenship, and Building a Win-Win-World.

“In the midst of the confusion created by today’s crises, there are few people who can provide viable solutions that not only serve our local communities but also address the global economy. Bernard Lietaer and Jacqui Dunne are such a brilliant force for good.”

— Mariana Bozesan, PhD, integral investor and author of The Making of a Consciousness Leader in Business.

See more reviews for the book here.

A foreword by John Perkins

author of Confessions of an Economic Hit Man

We have entered revolutionary times.

People across the globe have lost faith in the ability of government and business leaders to resolve the problems facing humanity. The global economic depression has shattered the lives of Andean peasants, African fishermen, corporate executives, and the average house hold alike. Despite claims that the current economic malaise is ending, the general public remains unconvinced, suspicious, and shaken. The promised “recovery” is uneven and uncertain; monumental issues still remain to be resolved […].

Bernard Jacqui-6379a-cropped

About the authors

BERNARD LIETAER is a leader in the field of money for more than thirty years as a central banker, a fund manager, a university professor, and a consultant. In 1992, Business Week named him “the world’s top currency trader”. A co-designer of the European Currency Unit — the precursor to the euro—he is currently a research fellow at the Center for Sustainable Resource Development at the University of California, Berkeley.

View Bernard’s full bio here.

JACQUI DUNNE is an award-winning journalist and founder of Danu Resources, an emerging leader in helping entrepreneurs develop technologies and initiatives that restore the earth. The company is an interface between donors and projects, creating a flourishing paradigm shift for a quadruple bottom line: people, planet, profits, and power within.

View Jacqui’s full bio here.

Order your copy now on Amazon or on Berrett-Koehler publishers!

Related article

Successful mutual credit system thrived in Irish pubs,, February 2013.

“Rethinking Money” provides remedies for challenges faced by government, businesses and more. It demystifies the current system of money and strikes a deep chord with readers eager to find innovative, meaningful solutions that will do far more than restore prosperity — it will provide the framework for an era of sustainable abundance.

Read the full article here.

The Story of the 11th Round

The story of the 11th round illustrates how the introduction of interest in a monetary system forces artificial competition amongst its users beyond what would naturally occur.

Once upon a time, there was a small village where people knew nothing about money or interest. Each market day, people would bring their chickens, eggs, hams, and breads to the marketplace and enter into the time-honored ritual of negotiations and exchange for what they needed. At harvests, or whenever someone’s barn needed repairs after a storm, the villagers simply exercised another age-old tradition of helping one another, knowing that if they themselves had a problem one day, others would surely come to their aid in turn.

One market day, a stranger with shiny black shoes and an elegant white hat came by and observed the whole process with a knowing smile. When one farmer who wanted a big ham ran around to corral the six chickens needed in exchange, the stranger could not refrain from laughing.  “Poor people,” he said. “So primitive.” Overhearing this, the farmer’s wife challenged him: “Do you think you can do a better job handling chickens?” The stranger responded: “Chickens, no. But I have a much better way to eliminate all the hassles. Bring me one large cowhide and gather the families. I will then explain this better way.”

As requested, the families gathered, and the stranger took the cowhide, cut perfect leather rounds in it and put an elaborate stamp on each round.

He then gave ten rounds to each family, stating that each round represented the value of one chicken. “Now you can trade and bargain with the rounds instead of those unwieldy chickens,” He said. It seemed to make sense and everybody was quite impressed with the stranger.

“One more thing,” the stranger added. “In one year’s time, I will return and I want each of you to bring me back an extra round, an eleventh round. That eleventh round is a token of appreciation for the improvement I made possible in your lives.”

“But where will that round come from?” asked the wife.

“You’ll see,” replied the stranger, with a knowing look.

Assuming that the population and its annual production remained exactly the same during that year, what do you think happened? Remember, that eleventh round was never created; it was never cut from the cowhide.

As the stranger had suggested, it was far more convenient to exchange rounds instead of chickens on market days. But this convenience had a hidden cost: the demanded eleventh round generated a systemic undertow of competition among all the participants. One out of every 11 families would have to lose the equivalent of all its rounds, even if everybody managed their affairs well, in order to provide the eleventh round to the stranger.

The following year, when a storm threatened some of the farmers, there was an atypical reluctance to assist neighbors. Families were now wrestling one another over that eleventh round. The introduction of interest-bearing money actively discouraged the long-standing village tradition of spontaneous cooperation.

The Eleventh Round is a simplified illustration for non-economists. The impact of interest was isolated from other variables by making the assumption of a zero-growth society: no population increase and no production or increases in the money supply. In practice, of course, all three variables (population, output and money supplies) grow over time, further obscuring the impact of interest.

The point of the Eleventh Round is that, all other things being equal, the artificial competition to obtain the money necessary to pay the interest is structurally embedded into the current system.

So how does a loan, whose interest is never created, get repaid?    In a static or declining system, it requires someone else’s principal being used. In other words, not creating the money to pay interest is the device used to generate the scarcity necessary for a bank-debt monetary system to function. It forces people to compete with each other for money that was never created, and penalizes them with bankruptcy should they not succeed. When the bank checks creditworthiness, it is really verifying their customers’ ability to compete successfully in the market place– that is to say, to obtain the money that is required to reimburse the principal and interest. Ultimately, someone must always lose.

In the current national currency paradigm, one reason why so much attention is paid to central bank decisions is that increased interest rates necessitate more bankruptcies in the future. The economic pie must grow that much faster just to break even. The monetary system obliges us to incur debt and compete with others in order to perform exchanges and pay the resulting interest to the banks or lenders. No wonder “it is a tough world out there,” and that those who live within a competitive monetary system so readily accept Darwin’s supposed “survival of the fittest.”    Excerpt from Of Human Wealth (Forthcoming).

Creating Wealth

by Gwendolyn Hallsmith & Bernard Lietaer

Growing local economies with local currencies

The underlying assumptions, frameworks, and institutions of our economy often go unquestioned, and one of the least understood pieces of the economic puzzle is money itself. Money and currency are critical leverage points for a sustainable local economy, and city leaders can do a lot to direct resources and initiatives that will enhance the quality of life in their communities by developing new forms of exchange. Beyond money and currency lies the role of capital; the book also explores the wide array of capital that communities need to build: natural, social, human, institutional, cultural, built, technological, financial, and others to shepherd the power of the economy to the service of a healthy, vibrant, and sustainable society.

This book can now be pre-ordered on

Some quotes about the book:

“I dare consider this is the single most important reflection in economics since Adam Smith”.

Dr. Samir Ghabbour, University of Cairo, Chairman, Egyptian National Committee for the UNESCO Man and Biosphere Programme (MAB)

“Two masters have come together to create an instant classic. Few can hold a candle to Gwendolyn Hallsmith when it comes to a systems approach that enables communities to vision a different future. Bernard Lietaer as an originator of the Euro is without peer when it comes to both the theory and practice of expanding the possibilities by creating new currencies. Together, they share a commitment to renewing cities and creating a sustainable world for all endangered species — including our own. This is a book that provides framework, theory, examples galore and tools. Get it. Use it. For us at TimeBanking and for our law school course in System Change, this is required reading”.

Edgar S. Cahn, PhD, JD, Ashoka Fellow, Distinguished Professor of Law, originator, TimeBanking Washington, DC

“Not since Natural Capitalism has a book offered new ways for wealth to be created; it’s a must read for city counselors, local politicians, business people and everyone who wants a vibrant economy without destroying the planet in the processs”.

Harry Blutstein, Founder, The Lighthouse Bureau, Northcote, Australia

About the authors

Gwendolyn Hallsmith is the Director of Global Community Initiatives, a nonprofit organization dedicated to sustainable development, and has been a leader in the sustainable communities movement for more than fifteen years. She is the author of The Key to Sustainable Cities: Meeting Human Needs, Transforming Community Systems from New Society Publishers, and she has extensive experience working with communities to identify ways in which they can achieve their objectives for better governance, sustainable economic development, and a healthy environment.

Bernard Lietaer‘s biography can be read on this page.

Related article March/April 2013 “Growing economies with local currencies.”

“We fear scarcity, the sense that there is never going to be enough for everyone. The sense of scarcity has driven human competition since the dawn of civilization—for water, for hunting territory, for women, for land. On Spaceship Earth, scarcity is a fact of life. Fossil fuels are increasingly scarce, along with sweet water, rainforests, precious metals and fine jewels. Other things will always be scarce—good pitching arms, original Rembrandts, Cliff Walk properties in Newport, operatic sopranos, true genius. When there are a lot of people who want very scarce things, the value of the scarce resource goes up relative to other resources—this is simple supply and demand economics.”

Read the full article.

The Story of Curitiba in Brazil

The story of Curitiba in Brazil illustrates how the introduction of a complementary currency was able to help a developing and impoverished city leverage its untapped resources to creatively solve a host of challenges and support environmental clean up, job creation and city restoration.

Garbage was a major problem in Curitiba, the capital of the southeastern state of Paraná, Brazil.  Its urban population had mushroomed from 120,000 in 1942 to 2.3 million in 1997. Many of the inhabitants lived in favelas, shantytowns made of cardboard and corrugated metal. Garbage collection trucks could not enter these favelas as the streets were not wide enough. The garbage piled up and disease broke out.

Jaime Lerner, who became mayor of Curitiba in 1971, did not have funds to apply customary solutions, such as bulldozing the area or building new streets. Bond measures, further taxation, or federal assistance were simply not options. Another way had to be found.

What Curitiba did have was an abundance of food supplies owing to the fertile lands and tropical climate of southeastern Brazil. It also had a municipal bus system that was underutilized, with many favela residents unable to afford public transportation. Mayor Lerner made use of these local resources to help resolve Curitiba’s urban issues.

Large metallic bins were placed at the edge of the favelas. Anyone who deposited a bag full of pre-sorted garbage received a bus token. Those who collected paper and cartons were given plastic chits, exchangeable for parcels of seasonal fresh fruits and vegetables. In addition, a school-based garbage collection program supplied poorer students with notebooks.

Tens of thousands of children responded by picking the neighborhoods clean. Parents made use of the tokens to travel downtown, oftentimes to find jobs. The bus tokens were soon accepted at local markets in exchange for food. In one three-year period, more than 100 schools traded 200 tons of garbage for 1.9 million notebooks. The paper-recycling component alone saved the equivalent of 1,200 trees—each day!

Eventually, more than 70% of Curitiban households became involved in the programs. The 62 poorer neighborhoods alone exchanged 11,000 tons of garbage for nearly a million bus tokens and 1,200 tons of food. Other programs were created to finance the restoration of historical buildings, create green areas, and provide housing—all by methods that placed little or no financial burden on the municipality.

The many initiatives—environmental cleanup, city restoration, job creation, improved education, disease intervention, hunger prevention—were each tackled without having to raise taxes, redistribute wealth, issue bonds, rely on charity or obtain loans from the federal government or organizations such as the World Bank and the International Monetary Fund (IMF). The improvements burdened no one. Everyone benefited.

The results in purely economic terms are worth noting. From 1975 to 1995, the Gross Domestic Product (GDP) of Curitiba increased an average of 75% more than its parent state of Paraná, and 48% more than the GDP of Brazil as a whole. The average Curitibano earned more than three times the country’s minimum wage. If non-traditional monetary gains, such as the exchange of garbage for provisions, are taken into consideration, the real total income for residents was at least 30% higher still. The results in human terms—in the renewal of dignity and hope for a better future—can only be imagined.

Curitiba discovered a means by which to match unmet needs with unused resources. They did so by making use of complementary currencies—monetary initiatives that did not replace but rather supplemented the national currency system. This innovative approach provided much needed improvements to the local economy. It enabled a developing and formerly impoverished city to empower itself and vastly improve its conditions in the remarkable span of a single generation.

In 1990, Curitiba was honored with the United Nations’ highest environmental award, granted by the United Nations Environment Program (UNEP).

Excerpt from Of Human Wealth by Bernard Lietaer and Stefan Belgin

Subscribe to News