La Bourse / Volume III / Nº III.03 / Quiz, reflection, essays

A man writing at a desk on a balcony above a mountain valley, books stacked beside him, cloud over the peaks. — Plate III.03 · Quiz, reflection, essaysThe Stamp, at the End of the Month.A currency is not a thing. It is an agreement with a running cost, and somebody is always paying it. The only question a design settles is who.

ASSESSMENT · Chapter III.03 — Complementary and Local Currencies

Three instruments: a ten-point quiz, eight reflection questions, five essay prompts. The quiz checks comprehension rather than recall. The reflections are private and first-person. The essays are arguable from more than one side.

THE QUIZ — ten points

Four on recall.

1. Write the cost identity and define each term.

c = C / T = C / (M · V) — annual operating cost over annual turnover, where turnover is the stock outstanding multiplied by its velocity. c is the transaction fee that would exactly break even. One mark for the expression, one for naming c as a break-even fee rather than as an efficiency ratio — the second is what makes it decidable.

2. State the relationship between a demurrage rate and a transaction fee.

d = c · V = C / M. They are the same instrument priced off different bases, and velocity is the exchange rate between them. Credit any answer noting that a fast circuit needs a proportionally higher carrying charge to raise the same revenue from a smaller stock.*

3. What did Stodder find about WIR turnover, and what did Stodder and Lietaer add?

That WIR turnover is countercyclical — used more in recessions, more reliably so than the official Swiss money supply. Stodder and Lietaer separated the mechanism: large non-registered firms supply the countercyclical swing through their balances, small registered firms through their velocity.

4. In the Wörgl experiment, what was the demurrage rate, what did the scrip finance, and how did the scheme end?

One percent per month on 32,000 schillings of labour certificates, financing roughly 100,000 schillings of public works in thirteen and a half months. It was withdrawn on 15 September 1933 after the Oesterreichische Nationalbank asserted its note monopoly, and the ban was confirmed in court on 18 November 1933. It was stopped, not starved. Full marks require that distinction.

Four on application.

5. A colleague proposes a town currency: residents buy vouchers at par, spend them at 200 local shops, and shops redeem them at the council. Diagnose the velocity problem before it happens.

Consumers buy from a short list and sell to nobody, so credits accumulate at the retail end with nowhere to go; the shops' only exit is redemption, which ends circulation. Expect a velocity near one. The stronger answer notes the structural fix — recruit business-to-business members who both buy and sell, which is the whole difference between Bristol's 1.36 and Sardex's 12.75.

6. A scheme reports a healthy surplus. On inspection, most of its income is from vouchers sold and never redeemed. What have you learned?

That its income line grows as its currency circulates less. Breakage pays best exactly when the scheme is doing least monetary work, so a surplus from breakage is not evidence of viability — it may be evidence of the opposite. Credit any answer distinguishing breakage from seigniorage.

7. Why is a mutual credit circuit's non-convertibility a regulatory advantage rather than an inconvenience?

Because a unit no member may exchange for national money is trade credit rather than a deposit or e-money in most jurisdictions, which keeps the scheme outside the regime that Bristol Pound estimated would have cost at least £50,000 in legal fees to enter. The best answers add that it also removes float management, exchange-rate risk and any speculative interest.

8. Bank WIR's net interest income is 3.53 times its commission income. What does that imply about how to design a new complementary currency?

That the currency is carried by a balance sheet earning elsewhere, and that the design question is therefore what the scheme is bolted to rather than what the unit looks like. Full marks name at least two alternative attachments from the record — a payments agency (Banco Palmas, 52 percent of revenue), a subscription (Sardex), a redemption fee plus a stamp (Chiemgauer).

Two that require the arithmetic to be done.

9. A proposed circuit has 400 members, each with a credit line of 9,000, and costs 360,000 a year to run. At what velocity does its cost ratio fall to 3 percent? Show your working.

Stock M = 400 × 9,000 = 3,600,000. Break-even condition C/(M·V) = 0.03, so V = C/(0.03 · M) = 360,000 / (0.03 × 3,600,000) = 360,000 / 108,000 = 3.33 turns a year. At V = 2 the ratio is 5.00 percent and it fails; at V = 4 it is 2.50 percent and it clears. The point of the question is that the answer is a velocity, and a velocity can be made somebody's objective.*

10. The Bristol Pound cost £150,000 a year and moved £952,381 a year. Its managing director states it would have had to grow fifty to a hundred times to fund itself. Show that these two statements are the same statement.

c = 150,000 / 952,381 = 15.75 percent. At fifty times the turnover, with cost held flat, c falls to 15.75/50 = 0.315 percent; at a hundred times, 0.158 percent. Both land at card-network interchange, which is the fee a user would actually pay. The stronger answer names why this matters: the two figures were derived from opposite ends and were not computed from each other, so their agreement is evidence rather than restatement.

REFLECTION — eight questions, for one person and a pen

These are not for a room. Write the answers by hand if you can; the slowness is the point.

Name something you have supported because it was good rather than because it could pay for itself. What would you have needed to know, at the start, to have supported it in a way that lasted?

Where in your own life does money you are owed circulate, and where does it sit? What is the difference between those two, in your own case?

You have been part of a circle where favours moved freely and were never counted. What kept it honest — and what would counting have cost?

Think of a number you have quoted about something you believe in, and have never checked. Which one is it? What has stopped you?

When have you kept going with something past the point where the arithmetic had already answered? What would it have taken to close it well instead?

Whom do you already trade with, repeatedly, without money changing hands in any meaningful sense? Write the list. It is longer than you expect.

What would you want to still be running in your town ten years after you stop paying attention to it — and what is it currently attached to?

Where have you called something a failure that was actually stopped by somebody else's rule? What is the honest name for what happened?

ESSAY PROMPTS — five

Each is arguable from more than one side. Each requires at least one source the chapter cites and at least one it does not.

1. The nine-year half-life: design flaw or normal mortality? The chapter computes a nine-year half-life for the British retail town pound and finds no measurable median across the wider set. Argue either that the town pound is a badly designed instrument that should be replaced by business-to- business circuits, or that a nine-year life is an ordinary and acceptable lifespan for a civic experiment whose value was never monetary. Use Petz and Finch (2025), and one source on organisational mortality or the lifespan of voluntary associations that the chapter does not cite.

2. Is WIR evidence for complementary currency, or evidence against it? The chapter's cut is that Bank WIR's currency is carried by its mortgage book. Argue either that this vindicates the model — the currency is durable because it is properly capitalised — or that it demonstrates that a complementary currency cannot stand on its own economics and is therefore not an independent monetary innovation at all. Engage Stodder and Lietaer (2016) directly, and one critique or alternative account of WIR that the chapter does not cite.

3. Fureai kippu and the limits of monetary framing. Ninety-five percent of NALC's time credits in 2010 were never redeemed. Argue whether fureai kippu is best understood as a currency at all, or as a recording practice inside a volunteering scheme that Western writing has misdescribed for thirty years. Use Hayashi (2012), and one source on volunteering motivation, reciprocity or gift exchange that the chapter does not cite.

4. Localisation: what was actually achieved? Banco Palmas reports local purchasing rising from 20 to 93 percent; Marshall and O'Neill found limited localisation effects for the Bristol Pound. Take a position on whether a local currency causes localisation or merely makes pre-existing local trade visible — a question the Bristol transaction data directly raises. Use Marshall and O'Neill (2018) or Jayo, Pozzebon and Diniz (2009), and one empirical source on local multipliers that the chapter does not cite.

5. Should a scheme publish its cost ratio? The chapter argues that the field's largest information failure is that almost nobody publishes annual operating cost against annual turnover. Argue the counter-case: that requiring a viability ratio on the front page would kill worthwhile civic experiments in their first three years, when the ratio is always terrible and always improving, and would import a commercial test into a domain that was never commercial. Use Schroeder (2015) on the financing of complementary currencies, and one source on measurement effects, target-setting or Goodhart's law that the chapter does not cite.