Currency Pluralism and Economic Stability: The Swiss Experience
The Swiss complementary currency WIR is a classic example of monetary creation managed by economic agents lying outside the traditional banking system. When faced with tightening of credit or liquidity crises, Swiss small businesses increase their WIR transactions; when conditions improve, they return to the Swiss franc. This countercyclical effect illustrates the potential for parallel currencies to serve as tools for macroeconomic stability.
This note will describe how currency pluralism can serve as a potential tool for policies seeking to stabilize economies that have become inherently unstable. “Pluralism” in this instance means a system in which one or several parallel currencies circulate within a given economy alongside a primary currency—complementing it without in any way seeking to replace it.
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