World of Money

In Land of Euro, Towns Adopt an Alternative

While more than 300 million people in Europe use the euro to buy life's essentials, a small but growing number concentrated in the German-speaking world use a proliferation of currencies with names like chiemgauer, urstromtaler, landmark...


By CARTER DOUGHERTY
Source: New York Times


Christian Gelleri, with his straightforward manner of speech, rumpled suit and home office, hardly resembles the polished central bankers whose every breath captivates financial markets. But just as Jean-Claude Trichet, president of the European Central Bank, lays claim to the title "Mr. Euro", Mr. Gelleri can plausibly call himself "Mr. Chiemgauer".

Mr. Gelleri runs an organization that issues an alternative currency, known as the chiemgauer, that consumers in the region southeast of Munich use to buy products as diverse as pizza, haircuts and rugs. Aimed at fostering the production and consumption of local products and services, the chiemgauer challenges the central banking orthodoxy that pumping more cash into an economy accelerates inflation and eventually harms growth.

"When people use the chiemgauer, the apple juice producer sells more bottles and the cheese maker sells more cheese", Mr. Gelleri said. "In theory, this is not supposed to happen, but the fact is it does."

While more than 300 million people in Europe use the euro to buy life's essentials, a small but growing number concentrated in the German-speaking world use a proliferation of currencies with names like chiemgauer, urstromtaler, landmark, kirschblute and kann was.

Issued by private organizations, these currencies are probably better understood as vouchers - pieces of paper that can be redeemed for goods and services at regional businesses that have agreed to accept them. Charitable organizations sell the currencies for euros, at a profit, creating an incentive for people to obtain them. That, added to the desire to buy locally in an era of globalization, gives businesses that accept them a new vein of customers.

But they also typically include a feature aimed at jarring users into spending them, In the case of the chiemgauer, the notes lose 2 percent of their value each quarter unless spent. Regiogeld, a German association for alternative currencies, tracks 21 such types of money in circulation in Germany, Austria and Switzerland, with an additional 31 in preparation. Gerhard Rosl, an economist with the University of Applied Sciences in Regensburg, Germany, has also located similar experiments in Denmark, Italy, Scotland, Spain and Italy.

According to the Bundesbank, the German central bank, these alternative currencies are legal. But they are not legal tender like the euro, the official currency shared by 13 European nations. Orthodox economists do not dispute that the chiemgauer's velocity outstrips the euro's, but they contend that people will logically draw fewer chiemgauers to protect themselves against the automatic devaluation.

Jurgen Wemhoner, a retired retail manager who estimates he spends several hundreds chiemgauers a month, said the currency's appeal was that it supported the locals who accepted it. That seems to matter very much to people in Rosenheim. "This currency gives small villages and regions a chance to survive", Mr. Wemhoner said.