Regional Economic Communities

A business and community paradigm which is viable in the long-term – a concept worth living

Market currency design: The Grok

The market community uses the complementary currency Grok as tokens of trade exchange. The Grok has been crafted to meet the following criteria:

  1. The Grok is a currency with as little need of central governance as possible, and it should provide no impetus of its own when the activities of the market participants are balanced. It thus facilitates a truly free market.
  2. The Grok is a trustworthy currency, since misuse of the market community is precluded. The market system as a whole cannot be cheated of value by individuals.
  3. The value of the Grok in terms of purchasing power (of a mixed basket of commodities) should remain stable, i.e. more or less constant, over time. To ensure this, interest and speculation are not allowed.
  4. The Grok is a means of value comparison and payment, it should explicitly encourage trade. To do so it must flow and not be hoarded, i.e. it cannot be used to store value.*
  5. Since the requirement for well-founded trust automatically leads to a cautious approach to the right to create Groks, a diversity of possibilities ensure that sufficient Grok liquidity is available.
  6. The Grok must be legal according to national law and, if possible, not subject to scrutiny by the authorities which monitor banking activities.
  7. The Grok is designed to keep operating costs of the market community as low as possible.

* The concept provides a mechanism for storing value which is completely independent of the Grok – as shared ownership of all the assets of a ReeComm, which will mainly consist of local businesses. These produce the things we actually need, i.e. the things of real value.

We'll look at how these design requirements have been met point for point:

1. A REALLY free market

The Grok is not created by any central authority, it is created by the members of the market community themselves – as and when they need it. This is in stark contrast to the prevalent mechanism, whereby a central bank is charged with issuing the currency and trying to keep its value stable. That task is very difficult (if not impossible) for a currency designed as a debt-issued currency with compound interest. The Grok is a self-regulating currency design rather than a centrally governed paradigm.

As explained on the previous page, the Grok does encourage trade by applying a circulation safeguard fee to entitlement balances; but it excerpts no pressure when economic activity is balanced.

Having the participants themselves create the currency need not imply a lack of trustworthiness:

2. Well-founded trust

To preclude misuse some sort of security must be deposited for a Grok creation facility. A corresponding portion of the deposit will be retained as property of the ReeComm if an account must be closed which has a creation balance. The deposited items can be taken out of deposit provided the account has a zero or entitlement balance.

With one exception, the type of item accepted for deposit should be stakes in local businesses / projects oriented to sustainability, or be convertible into or leading to such assets, e.g. national money or work performed for the ReeComm. The notable exception is mutual guarantees of small member groups, which make it possible for people without much to deposit to each acquire a modest Grok creation facility, while not compromising the requirement for the Grok to be very trustworthy.

3. Stable purchasing power

No interest is charged or granted, nor allowed to be charged or granted, on Groks. Since inflation is for the main part caused by compound interest, thus no inflation is to be expected for Groks. As with interest, speculation for profit is also forbidden.

The value of the Grok is completely independent of state money (and any other currency). Its current value can nevertheless always be expressed in pounds or dollars (and vice-versa) via the relationship of both to the assets of the CPO in the form of one joint-ownership certificate:

1000 Groks = 1 joint-ownership certificate = Current certificate value in national currency

The value of the Grok
The value of the Grok

The value of joint-ownership certificates is expressed in Groks rather than national currency, since the Grok is expected to be free of inflation – an essential requirement when we view the certificates as a means of long-term value storage.

Further possible ways for a ReeComm to measure an "official" clearing rate are noted in the FAQ on the relationship with tax authorities.

The Grok is underpinned by the total value of the ReeComm, the major part of which will be the assets in which the ReeComm has invested. The ReeComm as a functioning Coop has in itself a certain value, in particular the hard work put into its creation and nurture.

4. Encouraging trade and maintaining flow: Circulation safeguard (demurrage)

The concept of Regional Economic Communities provides for storage of value independently of the Grok – as joint-ownership certificates of the CPO. Thus there is no need to hoard them – people who wish to store value just buy certificates rather than Groks. Beyond this basic design, a small but "nagging" incentive is employed:

To ensure that the Groks keep flowing for the purpose of trade remuneration and are not left unused, they are subject to a regular circulation safeguard fee (demurrage). How much the fee is will normally be decided by vote from year to year in the General Meeting; we suggest trying 0.5% or 1% per month. This means that every month, 0.5% or 1% is deducted from the positive balance of the market account of every market participant. The circulation safeguard is applied only to earnings (positive) balances, since application to creation (negative) balances would penalise the creation of Groks and thus apply a brake to trading.

This fee does not disappear from the system, but is used according to the stipulations of the General Meeting.

Due to the circulation safeguard fee, the currency intentionally loses its advantage over goods and services. Like these, it is subject to an ageing process and loses value when stored. Unlike the rate of inflation, the amount of the circulation safeguard fee is known right from the start.

Groks which are not currently needed may for example be lent interest-free to a company of the CPO. Since the lender will normally instinctively look for a company (or division of the ReeComm) with good long-term prospects, this will subtly promote long-term viability. They may also be used to buy joint-ownership certificates, should the CPO or another market participant offer some for sale.

5. Ensuring sufficient liquidity

As stated above, Groks only come into existence when a member excercises their creation facility – for which either entitlements, national currency, material possessions or services must first flow from the member to the ReeComm. Put bluntly, you can't get more out than you put in.

This design feature, while ensuring the value and reputation of the Grok, does put clear and non-trivial requirements on each member of the market community. To avoid a liquidity problem – a lack of Groks to remunerate the goods and services which could and should be exchanged (or, indeed, a lack of community members) – a number of methods have been provided for a member to acquire an adequate Grok creation facility. Thus each prospective member should be able to find one or more ways which suit their personal situation.

Due to the fundamental nature of this aspect, and the diversity of possible means and securities, the next page is devoted to the topic of appropriate ways to provide sufficient liquidity.

6. The Grok must respect national laws

We have outlined here a conceptual design of the Grok market currency. Our initial concern was it being conform to German national law, which it is. We can make no statement regarding other countries, except that the relevant local authorities and fiscal experts should be consulted, and a set of rules for "your" Grok hammered out which are legal by your national laws, before you even think about founding a ReeComm.

If you do so, please let us know – we would be glad to gather such knowledge here and make it available to others.

See also: Is a licence required to issue Groks?

7. Keeping costs low

Keeping overheads low has always been an economically sound idea, and remains so here. In a similar way that the CPO will strive to minimise overheads so that all money provided for financing assets can be used for that purpose, so should the market community aim for a slim and effective management of its accounts and marketplace (and all other tasks).

Nowadays, computers and the internet, together with open-source software, no doubt provide the most cost-effective solutions in this respect. The accounting functions for the Grok accounts would ultimately be implemented somewhere on a computer, even if the Groks themselves were (optionally) issued as paper vouchers. Furthermore, an online marketplace is much more responsive than a paper brochure printed, say, once every three months. It is also less work for the market community staff, since the users manage their own adverts in the online marketplace.

Thus our suggestion is that the Grok accounts and marketplace be implemented purely as an online system. Payment in shops can be made possible either via a tablet-PC at the checkout or via Smartphone- or WAP-Access to Grok accounts; and if paper vouchers are still required, then a cooperation with any existing local trade system or regional currency can be sought.

See also: Why does the Grok only exist online?

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