Some Towns' Solution to Credit Crisis: Print Their Own Money

One way to beat the world's credit crisis: Start printing your own money.

The villagers of Santi Suk began creating their own cash here on the sun-bleached plains of northern Thailand following Asia's financial crisis a decade ago.

Decorating their money with children's sketches of water buffaloes and Buddhist temples, the villagers conceived it as a do-it-yourself attempt to protect themselves from the whiplash of vast outflows of speculative money which undermined local currencies and threw Thailand — and much of Asia — into recession in 1997-98.

At the time, some villagers faced questioning before Thailand's central bank and were accused by local government officials of plotting a secessionist revolt.

Now, with Thailand's economy slowing sharply, the DIY cash is beginning to flow freely again.

"We need our own money more than ever now," says Phra Supajarawat, the wiry, orange-robed abbot of the local Buddhist monastery, who doubles as a "governor" of Santi Suk's tiny, one-room bank. "Things are turning bad in Thailand and people need something they can believe in," he says.

Homemade currencies, sometimes known as community or complementary currencies, have a habit of popping up during economic crises. Some towns in the U.S., Canada and Germany introduced their own scrip during the Great Depression. Similar schemes have emerged more recently in Japan, Argentina and Britain.

One of the more successful programs has been in Berkshire County, Mass. Residents there pay $10 to get 11 "BerkShares," which are widely accepted in local stores, encouraging people to shop at home instead of using dollars to buy goods online or at large retail chains. Launched in 2006, BerkShares are still being used.

The idea is that by using local currencies, residents don't spend so many dollars, Thai baht or euros, thus helping to keep more resources within their communities. And because local currencies can't be banked away to earn interest, users keep spending it, providing a boost to their area's economy.

Pattamawadee Suzuki, an economics professor at Bangkok's Thammasat University, has studied the phenomenon closely. She says she is unsure whether there really is a significant financial benefit to using local currencies such as that used in Santi Suk. "When times are good, villagers prefer to use Thailand's national currency," she says.

"But there is a very strong social benefit to using local currencies," Pattamawadee adds.

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