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Author Topic: Capivaris  (Read 1364 times)
samablog
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September 20, 2011, 08:40:33 PM
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New alternative currency in use in Brazil:

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After school and on weekends, Carlos Leandro Peixoto de Abril sells ice cream made by his grandmother from a stoop alongside the family's cinder-block home.

Instead of Brazilian reais, though, the 11-year-old prefers payment in capivaris—a local currency emblazoned with the face of a giant rodent. Bills in hand, Carlos then heads to a local grocer and buys ingredients, at a special discount, for another batch of grandma's goods.

The capivari circulates only in this dusty, agricultural town 60 miles north of Rio de Janeiro. The money is an effort by the town, one of the poorest in southeastern Brazil, to encourage its 23,000 residents to spend locally.

Ten months after introduction of the capivari—named after the capybara, a pig-sized rodent common in a local river—the currency is lifting fortunes of local retailers and gnawing holes in the pockets of consumers. Capivaris pay for everything from haircuts to restaurant tabs to tithing at churches. The mayor even has plans to open a "Capivari Megastore," where local artisans and growers can showcase wares.

Entire article available here: http://online.wsj.com/article/SB10001424053111904583204576542851688284590.html?mod=WSJ_hpp_editorsPicks_2.

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September 20, 2011, 10:47:32 PM
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At first, Brazilian authorities frowned on the idea.

In 1998, just as Banco Palmas was getting under way, police with machine guns raided its tiny office, acting on a complaint from Brazil's central bank. The palmas hadn't yet been printed, but police seized a handwritten ledger and 100 reais.

Mr. Melo convinced the government the notes weren't a threat to the real. Because the palma was pegged to the sovereign currency, he argued, it was as legitimate as a coupon or other proxy for legal tender.

It's just a scheme to boost local spending by pricing at a discount in redeemable scrip which is backed 1:1 by govt currency. So it's not a new currency. The beggar thy neighbor strategy is questionable - the increased spending in the local economy will reduce spending in other neighborhoods. Those in turn will retort by printing their own currency negating any relative advantage. The net effect is similar to trade barriers and tariffs, a destruction of synergy and comparative advantage -  balkanization into small poor economic islands.

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September 21, 2011, 01:20:09 AM
 #3

If it's beneficial to restrict trade to within the town, why don't they just create a unique currency for each household, so that each household buys locally from itself. Everyone will be rich!
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September 21, 2011, 03:14:18 AM
 #4

BerkShares, anyone?

This is an ideal situation for Bitcoin, but until it's easy enough to use via handheld devices and/or paper bills with some form of encoding on them (QR codes?), the technology barrier will remain too high. Not to mention the eventual issue of price stability with a deflationary system.
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September 21, 2011, 07:52:31 PM
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At least projects like these make people aware that anything can be money. It's just a social agreement.

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September 22, 2011, 12:31:48 AM
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If it's beneficial to restrict trade to within the town, why don't they just create a unique currency for each household, so that each household buys locally from itself. Everyone will be rich!

Since I started buying exclusively from myself I've had a lot more business (fewer pencils though).

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