Central Banking, Monetary Policy and the Future of Money

Abstract

Argentina had the largest complementary currency system in the world between 1995 and 2006, known as Redes de Trueque. The case is well-known among counter-cyclical mechanisms because it multiplied the consumption of thousands of low-income households during the economic demise of 1998-2002 that skimmed 25% of the GDP. This chapter revisits the Argentine case and discusses its generative conditions. Large-scale complementary currency systems appear in periods of general economic demise with deep recession, unemployment, and poverty, in addition to crunches of the means of payment and the relinquishment of monetary sovereignty by the state. These generative conditions were all present in the Argentine case but to varying degrees and timeframes, and only coincided during part of the crisis. The convergence of generative factors makes it unlikely that a similar system would develop again, although it improved the match between currencies and their users, especially low-income women and informal workers.

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