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South East Asia News

MAY 23, 2000

Bank sees red over villagers' currency

The Bank of Thailand warns that the use of community currency -- the bia -- by villagers in the north-east is a threat to national security

BANGKOK -- Thai villagers in the north-east are in trouble with the country's monetary authorities for using their own community currency, the bia, instead of the baht.

On March 29, people from five villages in the north-eastern district of Yasothon began trading in bia.

Villagers could take out interest-free loans of up to 500 bia -- each bia worth one baht -- from the Bia Bank they set up, a small cinderblock edifice containing a desk, a safe and a cabinet.

The bia, which comes in notes worth between one and fifty units, could be used only to buy items from people taking part in the five-village currency system and has no value outside the villages.

"In the past, villagers did not understand how they could plan their spending, or see the effect of their spending," said Mr Jeff Powell, one of the organisers of the community currency, which was capitalised by non-governmental organisations.

He said using the bia for goods and services made in the villages would retain the local capital, keep spending in check and restrict exposure to global capital flows.

Between March 29 and mid-April, the villagers used the bia to trade fruit, vegetables and other products on weekend market days.

But after the alternative currency was reported in several Thai-language newspapers, the Bank of Thailand investigated and local officials told reporters the community currency could be "a threat to national security".

The Bank of Thailand has suspended trading in the community currency while it examines the idea.

"The community currency may not be a new idea, and may be effective, but the Monetary Act clearly states you are not allowed to print notes resembling money," said a source at the Bank.

"If everyone could then print money, you'd have a threat to national security."

Community currency supporters argue the bia is legal, saying the bank was investigating the villagers so as to crush alternative forms of development.

"It is very unlikely that anyone could mistake the bia for the baht, which has the picture of the king on it," said Mr Somchai Homlor, head of Thailand's Law Society.

"It's no more illegal than coupons used at food courts in exchange for noodles."

The bia notes bear drawings of rice planting, harvesting and traditional festivals. The Bia Bank has a capitalisation of less than 15,000 baht (S$660).

"It was just a dead-end for villagers in Yasothon under the Thai government's development model... they were in a debt cycle," said Mr Powell.

A member of a Bangkok-based NGO said: "They didn't have a chance. And now, when they're offered a new idea, the government challenges it ... because they don't want any deviation from their standard idea of development.

"The idea that a tiny, one-room bank threatens national security is so ridiculous." -- AFP

UNORTHODOX: But it's been done elsewhere

COMMUNITY currencies are not new. Local currencies flourished in the United States during the Great Depression, and more than 2,000 towns around the world have adopted the concept over the past 20 years.

Bangkok-based non-governmental organisations learned about the community currency from Mexicans and Canadians who had tried a similar system, and introduced the idea to the Yasothon villagers in Thailand.

"Traditional neo-liberal development doesn't work for these villagers, since it favours large agro-businesses, and villagers were unable to pay off their debts. They were looking for any alternative," said Mr Jeff Powell, one of the organisers of the Bia, which was capitalised by non-governmental organisations.

"You tell them you're offering interest-free loans, and suddenly people start listening." -- AFP

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