----Original Message-----
Thomas H. Greco, Jr.<[email protected]>
To: Tom J. Kennedy <[email protected]>
Date: Monday, August 27, 2001 10:38 AM
Subject: Re: The Ottawa Citizen article about Argentina's new bond currency

Dear Tom,

Thank you so much for your efforts in this matter. The Argentine initiatives are very significant in creating a credible opening for currencies that are issued by others than the central government/central bank nexus. I was there in April 2001, and saw what the people are doing for themselves in issuing community currencies and organizing trading clubs. If you've not seen my write-up on this let me know. (It is posted at this URL: www.cyberclass.net/greco.htm )

While in Argentina, I also saw examples of provincial "bonds" issued as circulating currency by the provincial govt of Catamarca. In 1994, in my book, I wrote about the same type issued by the province of Salta, etc.

Keep up the good work.

Thomas H. Greco, Jr., Director
Community Information Resource Center
P.O. Box 42663, Tucson, AZ 85733 USA
[email protected]
Consulting on local and regional development, community currencies, and equitable finance.

Our website contains an abundance of useful material on economic, social, and political transformation, including creative ideas about money, finance, community empowerment, and sustainable economics, including links to other excellent sources dealing with a wide range of related issues.

You'll also find the text of my book, New Money for Healthy Communities.

The Development of Moneyless Exchange in Latin America

(This article is taken from Chapter 11 of an upcoming book, Money: Understanding and Creating Alternatives to Legal Tender, published by Chelsea Green Publishing Company, USA, 2001.)

The Developing World Takes the Lead

During the 1980s, the first decade of the new wave, activity within the grassroots exchange movement was confined mainly to the English-speaking world, with a few systems eventually popping up elsewhere. From the early nineties onward, however, activity in the rest of the world has burgeoned, with new organizations and networks showing up in a variety of cultural contexts, first on European continent, then in Asia and Latin America. Much of this later activity was undoubtedly inspired by those earlier developments, but the development in South America has been unique and mainly home-grown.

The Global Trading Network (Red Global de Trueque, or RGT)

The megalopolis of Buenos Aires stretches out along the Rio Plata – 120 miles long and 30 miles wide, it is home to about half of Argentina's 40 million people. It is also the birthplace of a phenomenal modern manifestation of complementary exchange which has come to be known as Red Global de Trueque, or Global Trading Network. Beginning with the organization of a single "barter club" in an outlying sector of Buenos Aires in 1995, the social money movement as it is called in Latin America, has exploded into a socio-economic phenomenon involving hundreds of thousands of people in at least nine South American countries.

The emergence of social money in Latin America has occurred within the broader context of a movement toward community building and "social solidarity" that has arisen largely as a response to economic globalization. The Argentine government, like others in the region, has, over the past several years, been engaged in an aggressive program of privatization and has pursued policies favorable to the increasing dominance of multi-national companies in Argentine markets. As part of its new economic strategy, the government has now rigidly linked the Argentine peso to the U.S. dollar. Although these policies may have brought benefits to some, they have wreaked tremendous hardships on the poor and middle classes. Unemployment has reached high levels, officially estimated to be, at times, around 20 percent, overall. The reality is much worse than that. In many of the barrios of Buenos Aires, and in some rural villages, up to fifty percent are without paid work. Even skilled professionals have had a hard time of it. The social "safety-net" in Argentina is both flimsy and full of holes making subsistence very difficult for people without employment. The people have responded to this challenge with tremendous energy, initiative, creativity, and courage, building networks of mutual assistance, which is leading them toward greater self-reliance and social cohesiveness.

The Beginning

The first "barter club" in Argentina began in 1995 when a group of neighbors began a process of weekly meetings at which there were a few direct barter trades of food and clothing. They then quickly expanded their economic interactions into a kind of mutual credit trading (what they call "multireciprocal barter") involving a wider variety of goods and services. Since then, the organization of local clubs or "nodos" has proliferated among groups of poor and marginalized people throughout Latin America. The following is a slightly edited version of Heloisa Primavera's description of the birth and development of the RGT system .

"It was on the 1st of May 1995 that a group of ecologists, worried about the impact unemployment was having on the quality of life, created the first Barter Club comprised of twenty people, in Bernal, thirty kilometers from Buenos Aires in Argentina. Every Saturday, group members met to exchange their products (at the beginning, bread, various foodstuffs, fruit and vegetables, tarts, handcrafts, and afterwards, services – dental care, hairdressing, massage, therapy etc,). Some months later the first club opened in Buenos Aires... One year later, a television program gave a great impulse to further growth, which up to then had been rather slow and lead by the early pioneers. The accounts, which from the outset had been recorded in a centralized notebook, were soon computerized because of the increase in the number of transactions. Sometime later, a system of cheques was set up – similar to the French SEL system. However, people quickly began using these "cheques" as currency for other transactions, endorsing them and using them to pay for purchases. This was possible because the people knew each other and could trust the vouchers (checks) coming from a friend or trusted acquaintance. This was how the first " ticket trueque" (an exchange voucher) came into being, which was transferable to anyone that was part of the system. Right from the start the units were called "creditos" [Each credito or credit is equivalent in value to one Argentine peso, which is equivalent to one US dollar] because of their association with the trust that existed between participants. On becoming a member of the club, each participant would receive the same number of "credits;" thus encouraging and greatly multiplying the speed of transactions. Since everyone receives the same number of credits, the initial "equality" surprises new members, and at the same time stimulates the creation of new clubs. Since each member must produce and consume to be in the system, they are called "prosumers," a term suggested by Alvin Toffler’s Third Wave.

"Thus it was that two years later it was possible to find groups organized in different regions of Greater Buenos Aires as well as in the interior of the country. A form of administration linking the groups soon turned out to be necessary in view of the complexity of the exchanges that took place between members of different clubs, which is the richest aspect of the network. So the Barter Network came into being, with the "clubs" starting to call themselves "Nodos"(knots). This "central government" enabled equality to be maintained between the groups and the members of those groups.

"The founding group defined some ethical principles, but without doubt each autonomous group has freely interpreted them. Today there exist a great number of interconnected groups, but also many others that are completely independent of the founding group. Although the media was responsible for the initial spread of this initiative, it was the city government of Buenos Aires that provided the first government support, firstly, from the Department of Social Affairs, and afterwards from the Department of Industry, Trade and Commerce. This attitude encouraged other towns to do the same and five years later there are more than forty that have given their backing to similar initiatives, in one way or another.

"Within three years of its creation, the Red Global de Trueque had grown to more than 100,000 members. Representatives were invited to Helsinki to show this experiment to other community activists who were working to ameliorate the negative effects of economic globalization. The members of the Network therefore started to see their "success" (speed of growth, numbers of active members, for example) in an entirely new light. Various training systems were set up and diffusion throughout other Latin American countries began on a systematic basis, all within the context of creating a "critical mass," political visibility, variety in the experiments, and to join together with other forms of the Economy of Solidarity."

The Present

By the early part of 2001, there were "nodos" or trading clubs in 14 Argentinean provinces and 8 other countries of South and Central American, including Bolivia, Brazil, Chile, Colombia, Ecuador, El Salvador, Peru, and Uruguay. Creditos now take the form of a great assortment of "papelitos" or paper notes, which are printed by the larger clubs and issued to the new members of new or existing clubs. While firm statistics are not available, it is estimated that there are, within Argentina alone, between 500 and 1,000 trading clubs with a total combined membership of more than 300,000. But many of these are family memberships involving several people. Further, creditos notes are circulated among non-members, as well, so that the number of active participants in this parallel economy is much greater, perhaps as high as half a million. According to Primavera, the circulation of creditos notes "provides, on average, between one and four minimum wages (about 300 US dollars) per family; public tax returns have multiplied as a result of private agreements held by governments with individual "prosumers" from which products or services are accepted, and a judge has even authorized the payment of a living allowance in social money!"

A large proportion of the trading using these community currencies takes place at local trading fairs which are held at regularly scheduled times, some once or twice a week, others much more frequently. I was told by one of the movement leaders that on any given day, there are probably around twenty trading fairs going on in various clubs around the country. In April of 2001, I went to Argentina where I visited several trading clubs around greater Buenos Aires and had an opportunity to observe a few of their trading fairs. One of them, held in the "west zone," was particularly impressive. It was held on a Wednesday afternoon in a large community center and involved upwards of 400 people buying and selling. There was an atmosphere of excitement and vitality that was truly astonishing, and not a single peso or dollar was involved in any of the thousands of transactions that were made. Instead, one could see a variety of paper notes passing from hand to hand. These were the creditos notes issued by the clubs in this zone as well as those issued in several other zones. Figure 11A.1 shows a few of these notes. Within the trading fairs, there is no exchange of official money. Pesos and dollars are not permitted because of the tax implications. Argentina has a value added tax (VAT), which is a kind of sales tax. As long as there is no official money involved, trades are not taxed. What people do outside the fairs is, of course, a personal matter between the buyer and the seller.

Another club, located in a poor neighborhood, operates out of a former factory building. It is open for trading seven hours a day, six days a week. It was organized in the year 2000 by two men from the community, one of which is no longer involved, and is presently administered by a team of three people who have complete responsibility and control. There is no significant member participation. This nodo does not issue its own notes but utilizes the notes issued by other nodos.

The organizers have recently taken a 5-year lease on the factory property for a monthly rental fee of 2,500 pesos (equivalent to US$2,500). It is a large property that includes a huge main building, a more modest sized outbuilding, a parking lot, and a very large adjacent field. When we visited one of their daily trading fairs, they had only been operating in that facility for about a week. During our two-hour visit we estimated there must have been about 300 people buying and selling. We were told that on the previous day more than 2,000 people had passed through.

The costs of operation of the center are covered by admission fees, which are 20 centavos (20 cents) plus one half a credito. One can estimate from this what the total revenues might be. Assuming a modest figure of 500 paid admissions per day and 25 days of operation monthly, total monthly revenues would amount to 2,500 pesos (dollars) and 6,250 creditos. This is enough to pay the rent, which must be paid in pesos, and to pay the organizers and their helpers in creditos to do all the work that needs to be done to administer and maintain the operation. One would presume that there are also utilities that must be paid in pesos and this amount of activity would not provide sufficient peso income for that. The administrators told us, however, that their early fairs had been almost overwhelmed by the throngs of people who appeared, which they numbered in the thousands. Based on that experience, they estimate that their membership will soon reach 10,000 and they expect to have no problems raising the peso income they need.

We were also told that when they do have surplus peso income they use it to buy goods in the formal market to be sold for creditos in the trading fairs. These goods consist mainly of basic foods and ingredients, such as meat, vegetables, fruit, oil, wheat, eggs, and sugar. This practice effectively links the resources available in the formal (peso) market with the income earning possibilities of the trueque (creditos) market without suffering the negative effects, which a direct currency exchange would have.

The organizers told us of their plans for the various resources at their disposal on the site. They intend to continue using the main building for the daily trading fairs. They plan to convert half of the outbuilding into production spaces, such as woodworking shops, and to utilize the other half as classroom space for training people in basic skills. The adjacent field, which is covered with grass and has several large trees, will be made into a campground.

Organization and Operation

Each nodo or club is autonomous and has responsibility for its own organization, administration, budget, and finances. There is no centralized administration for the Network, only regular monthly meetings within each zone and a monthly inter-zonal meeting. At present, there are several models of organization that the various clubs follow and there is no uniformity in the issuance of the currency notes. Administrative costs are covered in different ways by the different clubs. Some impose a monthly membership fee while others, like the one described above, require buyers and sellers to pay a small admission fee to participate in the many trading fairs that the clubs organize. Some nodos are organized with an emphasis on building social solidarity amongst their members, while others are organized mainly as an economic expedient to provide a way in which cash-poor people can meet their material needs. The former are more participatory, while the latter tend to be more paternalistically administered by their core group of organizers.

The network provides marginalized people with opportunities they cannot find in the formal market economy. It is not seen as a substitute for the formal economy but a parallel and complementary economy. While helping people to satisfy their immediate needs, it also gives them an opportunity to develop confidence, skills, products, and services that can also enable them to function in the formal economy.

All kinds of goods and services are to be found within the barter clubs. There are bakers, dentists, bricklayers, and people of other trades and professions who can't find a place in the labor market. Reliable statistics do not exist but estimates of the total amount of creditos (credits) that have been issued by all the clubs in Argentina range from around 6 million on up. Currently, the volume of trading taking place within this barter network amounts to a minimum of 800 million pesos (equal to 800 million US dollars) annually.

The National Government Offers Support

The national government of Argentina has officially recognized the value and usefulness of "barter" exchange as a weapon against unemployment and has lent its support to the promotion of "multi-reciprocal exchange of goods and services" throughout the country. In December of 2000, an agreement was signed between the Government of Argentina and Red Global de Trueque in the City of Buenos Aires. Among the specific items of support contained in the agreement is a commitment by the government to assist the network in developing its organizational infrastructure to help it reach larger numbers of people across a wider area of the country. The government will help to promote interregional exchange by means of an Internet based communications system that will link the various clubs in the Network. They hope that this "partnership" can promote the formation of efficient enterprises that contribute to the creation of jobs and enable marginalized workers to develop skills and tools that may permit their entry into the "productive tissue" of the economy. The government has stated its clear intention to help, but not force, participants into the mainstream economy. It has committed to provide training and support that will assist "the gradual and orderly transition of the prosumers circuit ruled by social money (vouchers), toward the formal economy's area, building genuine ventures," but it will allow prosumers to continue their participation in the barter circuit, as they wish.

"We believe this network has had a great development but very low profile. Now we want to give it a better organization on the national level and use it as a good tool for development," said Enrique Martinez, Secretary of Small and Middle-sized Enterprises. Martinez thinks, "barter has been built as a element that jobless people recognize as a transition step toward the formal economy, or a substitute. From barter, people feel encouraged again. We cannot be absent from such a rich project". The goal of the Government is, on the one hand, to establish and expand the barter of goods and services as a substitute of the formal economic system, while, on the other hand, to make it easy for such people to go back into the labor market. Whether or not this government involvement will prove helpful remains to be seen.

There are a number of factors that close observers point to as contributing to the success of RGT. Among these are:

The regular membership meetings convened by each nodo

The use of only social money in most transactions

More reliance upon ethical behavior and peer pressure and less reliance upon formal rules

A great deal of local group autonomy and the avoidance of centralized leadership and control

Only a few shared rules which define a loose federation of nodos at both the regional and the national levels

A decision process which seeks consensus.

Among the more active participants of several Nodos, there is the belief that the success of the RGT could possibly lead to the creation of more far-reaching networks of socio-economic solidarity. For this reason the

Latin American Socio-economic Solidarity Network (Recluses) was created in 1999, and the Global Socio-Economic Solidarity Network (Red Global de Socioeconomía Solidaria - RGSES) in 2001. The latter came out of the first World Social Forum that took place in January 2001 in Porto Alegre (Brazil). The focus of these initiatives is the rebuilding of the social fabric and the creation of an Economy of Solidarity based on social money systems and other complementary economic, cultural and social strategies that address the whole economic process: production, trading, and consumption, with a simultaneous involvement with financial strategies, such as micro loans using a combination of both formal and social money.


As the trading Network has evolved, the participants have adopted a set of 12 principles that define the values, objectives, and operating characteristics of the associated clubs. These were proposed by the founders and include (among others) the following:

We are not trying to promote articles or services, but to mutually help ourselves to obtain a higher meaning of life through the intermediary of work, mutual understanding and equitable exchange.

We maintain that it is possible to replace sterile competition, selfish gain and speculation with mutual exchange between people.

We believe that our actions, products and services can respond to ethical and ecological norms, rather than the dictates of the market, consumerism, and the quest of short-term benefits.

The only conditions to which members of the Red Global de Trueque are bound are: to take part in periodic group meetings, to be involved in training programs, to produce and consume goods, services and knowledge available within the Network, in the spirit of the recommendations of the various Circles of Quality and Mutual Aid.

We believe that it is possible to combine group autonomy in the administration of its internal affairs with the fundamental ethical principles of the Network.

Over the past few years, there has been within the Latin American Socio-Economic Solidarity Network, considerable debate about adopting a 13th principle. It has to do with the question of whether, and how, the club organizers should be compensated. Discussions on this point have led to consideration of the role of volunteer help overall. There seems to be a widespread belief that reliance upon uncompensated work "has encouraged 'corrupt' practices very similar to those in political life…" Because of this, Recluses is now advocating adoption of the following principle in addition to the previous 12:

In the Economy of Solidarity nothing is wasted, nothing is volunteered, everything is recycled, everything must be paid for, and everything is divided in equal conditions!

Problems and Prospects

It should come as no surprise that something that has grown so large and so fast should manifest some difficulties. The autonomous functioning of the various clubs has resulted in a plethora of local currencies issued in a variety of ways, some of which may be questionable from the standpoint of strict reciprocity. Some of the larger issuers are unable to give a proper accounting of all the notes they have issued. While there is a strong desire among the various clubs in the network to accept each other's notes, the concerns and uncertainties have led some nodos to refuse to accept the notes of others causing some confusion and dismay among the people.

Adding to the confusion is the actuality of counterfeiting. This is the first real counterfeiting of a community currency that has come to my attention. Counterfeit versions of at least one of the larger note issues have been

injected into the network. This does not seem to have done significant harm since their number has been small and the counterfeit notes are not very hard to distinguish from the genuine ones. What happens when someone discovers that they have accepted a counterfeit note? Practice varies. Sometimes the person will simply pass it along, but quite often the local club or the issuing club will destroy the note and absorb the loss rather than force the holder to take the loss.

Another developing problem appears to be the emergence of political factionalism and a struggle for leadership within the movement. One faction is attempting to become the spokesman for the entire network and wants to replace the various local currencies with its own currency to be used throughout the country. It is this faction, led by the founders of the first Barter Club, which has signed the agreement with the Argentine government. Another faction is seriously concerned about preserving the autonomy of the local clubs and wants to follow a process which they hope will lead to some consensus about the critical issues facing the movement, but the first faction is not willing to participate.

It will be interesting to see how this plays out over the coming year or two. If the network is to avoid disintegration, the various clubs will need to come to some clear agreement on standards of practice for the proper issuance and management of their currencies.