1963-2018 - 55 years of Research for Social Change

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Back | Programme Area: Social Dimensions of Sustainable Development

Social Currency for Common Goods: The Case of the Palmas Currency (Draft)

This article aims to analyze the social currency Palmas issued by the Community Development Bank Palmas in Brazil. This currency is part of a comprehensive local development strategy combining various economic instruments (microcredit, correspondent banking, micro-insurance) and non-economic (professional training and support, cultural activities, forums of collective deliberation). First, it analyses the management system of the social currency using the analytical framework developed by Elinor Ostrom on the principles of design and governance of the commons. Second, it studies the flows of money to determine the cycles of monetary circulation. Finally, it briefly reviews the expenses related to the monetary system.

This paper attempts to approach the development process of solidarity finance public policy in Brazil, starting from the end of the 1990s. It starts with a brief historical account of the birth of grassroots movements during the military dictatorship, in 1970s and 1980s, and its importance in the return of democracy in Brazil. The paper also enumerates the economic changes and the entering of Brazil within the process of economic globalization, as well as the resurgence of cooperative ideas and initiatives of the solidarity economy. Within in the field of solidarity finance it is necessary to establish a link with the increase of incentive policies to support microcredit. In contrast to other Asian and Latin American countries where such experiences took place during the 1970s, in Brazil it only saw visible growth in the 1990s, both with the creation of microcredit organizations as well as the dissemination of government programmes. Thus, this paper presents the context by which solidarity economy initiatives grew stronger and its interface with the institutional environment created by the microcredit and financial inclusion agenda. It is important to highlight that this paper does not aim to analyse municipal or state level public policies, in spite of their relevance in strengthening the solidarity economy and microcredit initiatives. Federal government actions will be the focus of the analysis, showcasing changes encouraged within legislation as well as within the political and institutional environment at the Central Bank of Brazil and at public federal banks. Furthermore, this paper will attempt a more in-depth presentation of the community development bank (CDB) experience and the use of social currency. It demonstrates the difference between CBD and the traditional microfinance and how this experience is linked to different government policies and the challenges in consolidating it as a solidarity finance public policy.

This paper was presented at the special session on Alternative Finance and Complementary Currencies, organized by the United Nations Non-Governmental Liaison Service (UN-NGLS) at the UNRISD Conference on Potential and Limits of Social and Solidarity Economy.