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schwund"In a surprisingly growing number of regions in Germany private "regional currencies" are issued as a cash substitute for the euro. Currently, these regional currencies are conceived almost exclusively as Schwundgeld (depreciative currency), which loses value on a predetermined timescale. This loss of value is intended to encourage the money owners to spend their money quickly in order to boost local demand. This paper shows that the issuance of unofficial parallel currencies is not a fundamentally new phenomenon neither in Germany nor in other European countries. The theoretical assumptions of the Schwundgeld concept (Silvio Gesell (1862 – 1930)) are highly flawed and suboptimal from a welfare-theoretical perspective. However, the current economic welfare losses resulting from the issuance of Schwundgeld are negligibly small."

Determinants of the demand for regional money: "[T]he reasons underlying the demand for regional currency are likely to consist more in its curiosity value in an age when the monetary system is becoming increasingly internationalised and in the regional currency holders’ belief ((listen to Russell Roberts (Cafe Hayek) talking on Minnesota Public Radio about whether it is a good idea to "buy local.") that they are promoting the regional economy by using local money. Furthermore, these currencies provide those that hold them with the opportunity to demonstrate their loyalty to the region and thereby take a stand against globalisation ("Geld der Anti-Globalisierer" [Currency of the globalisation opponents]). According to research undertaken by Süddeutsche Zeitung, it is, at least, always the same people ("immer die gleichen") who pay in regional currencies."

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