A Boon to Kut Chum?

[GWR]

A system of tokens used in some NE villages for locals to exchange their own services without resorting to more normal monetary mechanisms. Is it still up and running? At one point in 2000, the Bank of thailand were investigating this currency with the thought that it might be infringing that hoary old chestnut 'National Security'. Images of the colorful tokens here. I suspect it was more to the point that So Sivaraksa - that bane of recalcitrant government officials - was involved: -

http://www.appropriate-economics.org/img/thailand.html


For more information, please contact:

Thailand Community Currency Systems (TCCS)
CCS Research Project
Dr. Apichai Puntasen
apichaipun@hotmail.com

http://www.rasmi-trrm.org
The Thai Community Currency Systems Project began in 1997 with the objectives of:

* Studying indigenous systems of non-monetary exchange,
* Disseminating the global experience of community currency systems with people's organisations in Thailand, and
* Initiating a pilot community currency system in Thailand.

"Bia Kud Chum", Thailand's first community currency system, began trading in March of 2000 in order to:
* Encourage local production and import substitution,
* Reduce the outflow of national currency from the community, and Revitalise local traditions of reciprocal exchange.

More on the BOT gripes here: -

http://www.appropriate-economics.org/asia/thailand/straitstimesmay23.html

A newsletter on the topic here: -

http://www.lets-linkup.com/LEISAmagazine.htm

[GWR]

This is a subject we have reported before, so I may add some archive links later: -

Villagers set for victory in campaign to use their own currency

Baht? We use Boon Kut Chum

Villagers in Yasothon's Kut Chum district are jubilant that their self-created monetary unit - the Boon Kut Chum - could become legitimate.

Following years of battle, their petition to have their own currency is being favourably treated. The Council of State recently ruled that the currency could be used in the community if it receives approval from the finance minister.

Chanchai Boonritchaisri, director of the Bank of Thailand's legal department, says that though the Finance Ministry has the authority to legitimise the currency under the Currency Act, it still needs to discuss the process and controlling measures with the central bank.

"If the village currency is to be legal, we need to control the combined amount so that it would not affect the overall economy," he said.

"If the combined amount is controlled, it would automatically limit the scope of area where the currency can be used. Meanwhile, we need measures to ensure that if the currency scheme flops or is aborted, it won't cause damage to bearers."

A mechanism would also be needed to ensure forgery protection and that villagers follow rules and regulations.

The effect on the overall economy should be tiny because the village currency would be circulated in a small community.

The central bank is open to similar schemes from other villages, but the applications would be screened on a case-by-case basis, Chanchai added.

The local currency was introduced in 2000 to reduce the villagers' dependence on the baht and to promote savings. But within weeks the Bank of Thailand banned it on grounds that it could breach the Currency Act.

"Everybody is delighted by the Council of State's ruling. There are now more transactions using the Boon Kut Chum inside the village," said Pranee Srimantra, chairman of a group advocating community development for self-dependence.

Pranee believed the use of the Boon Kut Chum would finally show whether a local currency could encourage a community to become more self-reliant.

"By using the Boon Kut Chum, transactions will be conducted among local people only. To deal with other communities, everyone will have to opt for baht. If local people stick to the Boon Kut Chum, they should be able to save money in baht and their community will become more self-reliant," she explained.

One Boon Kut Chum is equivalent to one baht. In the beginning, it was known as the Bia Kut Chum but was later renamed to avoid offending financial authorities. "Bia" was a unit of ancient Thai currency used in the Ayutthaya and early Rattanakosin eras.

Pranee's group issued 30,000 Boon Kut Chum in 2000. No more of the currency has since been distributed.

To accommodate the use of the currency, a cooperative was set up and each of its members was given 100 Boon Kut Chum for free. Under the concept, chicken egg farmers can barter for bananas at the same value of their eggs. If they want more bananas, they need to spend their Boon Kut Chum. If they do not have enough Boon Kut Chum, they have to spend baht.

Members are supposed to report to their cooperative with 100 Boon Kut Chum one year after they receive the currency. This was a measure to encourage local people to do transactions within their communities.

At its peak, the currency was circulated among more than 120 people in five villages in the Kut Chum district.

Following the ban by the Bank of Thailand, local people turned their back on the Boon Kut Chum. But in 2003 the north-eastern office of the central bank said it understood the concept of a local currency. So about 20 local people in Santisuk Village resumed the use of the Boon Kut Chum.

"We believe the use of the Boon Kut Chum will not threaten the baht because it is just a local currency used among very few people," Pranee explained.

She added local currencies were used in some parts of Canada, the United States, Japan and Indonesia without causing any problem.

Chutima Muangman, who heads Rak Thammachat Club rice mills, hoped the use of the Boon Kut Chum would be widespread enough to provide proof of whether a local currency could sustain a community's self-reliance.

Chularat Saengpassa, Anoma Srisukkasem

The Nation


http://www.nationmultimedia.com/2007/02/15/headlines/headlines_30026917.php

And there are other self-reliance programs underway in the area: -

Self-reliant community

How local people of Tambon Naso in Yasothon's Kut Chum district have adopted and nurtured their community's self-reliance.

1980 - 57 local people established the Soke Khum Poon Village Development Fund Shop with a Bt3,800 budget to reduce the community's dependence on three grocery shops which enjoyed a virtual monopoly and overcharged people. Today, the shop operates at a profit and has more than 200 members.

1983 - With support from Kut Chum Hospital and the Komol Keemtong Foundation, local people founded a club for traditional-medicine practitioners and herbal enthusiasts to reduce medicine costs and to conserve herbal medicines.

1989 - Locals started turning to herbal farms after many of them developed illnesses relating to farming chemicals.

1990 - The club for traditional-medicine practitioners and herbal enthusiasts was upgraded to a health centre, distributing herbs and herbal products.

1996-1997 - Rak Thammachat Club opened two rice mills. At the beginning, the mills suffered cash-flow problems and then started a community bank. This bank offered a higher interest rate for savings than commercial banks.

1998 - 16 residents contributed Bt1,000 each to a fund that offers farmers soft loans with the annual interest rate of one per cent.

1999 - After nearly one full year in operation, local people convened a meeting to discuss the fund. At that meeting, two foreign volunteers under the Canadian University Service Overseas were also present.

With their help, the Thai Community Currency System (TCCS) was introduced. Under this system, a form of local currency known as Bia Kut Chum (later renamed the Boon Kut Chum) was to be used as money within the community.

2000 - Local people started using the Bia Kut Chum. Weeks later, the Bank of Thailand suspended the use of the Kut Chum" currency in the district on grounds that it may break the Currency Act.

http://www.nationmultimedia.com/2007/02/15/national/national_30026914.php

[GWR]

Archive info on the alternative currency used in Kut Chum/Kud Chum: -

A system of tokens used in some NE villages for locals to exchange their own services without resorting to more normal monetary mechanisms. Is it still up and running? At one point in 2000, the Bank of Thailand were investigating this currency with the thought that it might be infringing that hoary old chestnut 'National Security'. Images of the colorful tokens here. I suspect it was more to the point that So Sivaraksa - that bane of recalcitrant government officials - was involved: -

http://www.appropriate-economics.org/img/thailand.html


For more information, please contact:

Thailand Community Currency Systems (TCCS)
CCS Research Project
Dr. Apichai Puntasen
apichaipun@hotmail.com

http://www.rasmi-trrm.org
The Thai Community Currency Systems Project began in 1997 with the objectives of:

* Studying indigenous systems of non-monetary exchange,
* Disseminating the global experience of community currency systems with people's organisations in Thailand, and
* Initiating a pilot community currency system in Thailand.

"Bia Kud Chum", Thailand's first community currency system, began trading in March of 2000 in order to:
* Encourage local production and import substitution,
* Reduce the outflow of national currency from the community, and Revitalise local traditions of reciprocal exchange.

More on the BOT gripes here: -

http://www.appropriate-economics.org/asia/thailand/straitstimesmay23.html

A newsletter on the topic here: -

http://www.lets-linkup.com/LEISAmagazine.htm

http://www.angkor.com/2bangkok/2bangkok/forum/archive/index.php/t-1829.html

[Scuba22]

For more on alternative currencies and local development, check out:

http://www.complementarycurrencies.org/

Cheers,

Scuba

[GWR]

Featured Frontpage:
http://www.2bangkok.com

But I would like to save it here without earlier posts about the same subject. Admittedly, this project was partly inspired by outsiders, but it predates the current rather twee fashion trend of sufficiency economy.

I note from this article that one Thammasart economist suggests that the advantages of the Bia Kut Chum are probably a great deal more social than financial. The original article also has a small slideshow of the village and its currency:
http://online.wsj.com/article/SB123128312320458913.html?mod=googlenews_wsj

* JANUARY 7, 2009
When It Comes to Cash, A Thai Village Says, 'Baht, Humbug!'
By JAMES HOOKWAY

SANTI SUK, Thailand -- 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.

http://s.wsj.net/public/resources/images/P1-AO226_FIYCas_DV_20090106182651.jpg
Photo: WSJ - Children's sketches of water buffaloes and Buddhist temples decorate Santi Suk's currency.]

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," Ms. Pattamawadee adds. "That place, Santi Suk, is more self-reliant than other rural areas of Thailand. They don't depend on remittances from relatives in Bangkok."

Many villagers -- who use the local notes as a means to barter for everyday goods -- corroborate Ms. Pattamawadee's analysis. A visit to the village's early morning market reveals a brisk trade in freshly harvested vegetables and a couple of butchers are hard at work selecting cuts from a side of beef. Shoppers haggle and gossip, clutching scrip depicting local rural scenes.

"We've learned to depend on our own work," says Buasorn Saothong, a robust 54-year-old rice farmer, who also dabbles in creating herbal hangover cures. ("Just chew on this paste and five minutes later you'll throw up and feel much better," she says.)

Over the years, there has been stiff opposition among Thailand's authorities to the Santi Suk villagers' experiment. The central bank, the Bank of Thailand, declared the villagers' currency "a threat to national security" in 2001 and brought Phra Supajarawat and other villagers to Bangkok for a scolding. "If groups in the country issue something that might become a currency, it's not allowed," says Chatumongkol Sonakul, who was governor of the Bank of Thailand at the time.

The villagers of Santi Suk launched their currency, which they called "bia," the local dialect word for "seedling," in the wake of the 1997-98 crisis. At the time, many were struggling with debt problems and were receiving fewer and smaller remittances from relatives working in the Bangkok area because of the financial crisis.

Two young foreigners from international volunteer organizations, Canadian Jeff Powell and Dutchman Menno Salverda, visited the area and suggested the villagers adopt a local currency to better manage their problems.

The villagers agreed. They approached Phra Supajarawat, now 68, to be the governor of the new village bank, which still consists of a safe housed in a hut that the villagers are happy to open up for anybody who wants to see the stacks of local currency piled inside. A competition was held among the local children to see who could come up with the best designs for the village's new money.

A few months later, in 2000, local government officials and police officers arrived in the village. Phra Supajarawat went along to see what the fuss was all about. Government officials told him he was treading on the toes of the central bank. "I thought, 'Oh no, the police are going to arrest me for counterfeiting,'" he recalls, laughing.

That didn't happen. But over the following months villagers, including Phra Supajarawat, were regularly taken to Bangkok to explain their rogue currency to the authorities. In the meantime, Santi Suk's "bia" notes went underground, used in secret by a handful of families.

In 2001, Nakorn Chompoochart, a lawyer with Thailand's Law Society, offered his services to help the villagers start circulating their currency again. "I told the villagers that people in other countries also had their own local currencies, and that if anybody tried to prosecute them, I'd defend them," he says.

Phra Supajarawat says Mr. Nakorn's offer of legal support gave people of Santi Suk the confidence they needed to persevere. To this day, no legal cases have been filed against them, although to make their currency absolutely legal, Thailand's Ministry of Finance would have to officially authorize its use. That still hasn't happened. A spokesman for the Finance Ministry declined to comment.

A breakthrough came when Phra Supajarawat learned from the central bank that one of its biggest objections to the villagers' currency was its name. The term "seedling" -- "bia" -- was the same as the word for "money" in the central Thai dialect used by the central bankers in Bangkok.

So the villagers changed the name of their currency to the Thai term for "merit" instead, and circulation began to steadily increase. The government dropped its objections, and Santi Suk-style currencies have since begun to slowly spread across the rest of northeastern Thailand as neighboring villages adopt the idea. Other villages are switching to barter trade for business instead of using Thailand's national currency, says Ms. Pattamawadee, the economics professor.

Today, interest in Santi Suk's monetary experiment is picking up again. Visitors from other parts of Thailand and nongovernment organizations are streaming into Santi Suk to see how it works, despite the currency's murky legal status.

"It was a big coup for us when the local rice mill began accepting it," says Ms. Buasorn, the hangover expert. "The mill is the focal point of the local economy. It means other people now realize our money is a real alternative."

Write to James Hookway at james.hookway@awsj.com
http://online.wsj.com/article/SB123128312320458913.html?mod=googlenews_wsj