May 7, 2000

SUNDAY Editorial: The sledgehammer and the Northeast village nut

Reports of a community currency in a remote northeastern village have rung alarm bells at the Bank of Thailand. Bia Kudchum (“Kudchum pence”), in the form of notes carrying drawings by schoolchildren, are for trading locally produced goods and services.

Although valid only in the community, and designed to be used alongside the baht rather than replace it, government economists see dire consequences.

The Kudchum Community Bank has so far issued about 30,000 bia, which carry a value equal to the baht, but cannot be exchanged for it.

In comparison with nonperforming loans totalling billions and billions of baht and government debt of billions of dollars, this may seem so small as to be negligible, but government regulators are not so sure, saying that the scheme poses a “threat to national financial security”.

Bank of Thailand officials point to a law that may make the bia notes illegal. This says that no one can use any material or symbol as money without the permission of the minister of finance. Even now, officials cannot explain the process of getting this permission, and have refused to say if the Bia Kudchum actually break the law. Privately, some government and bank officers say they do not think that the villagers are lawbreakers and that the scheme is clearly wellintentioned and for the benefit of the community. The Bank of Thailand, however, has demanded that the currency be withdrawn while it considers the matter.

Some commentators have pointed out that discount coupons, gift vouchers, and department store cards all seem to fall foul of the same law, but the Bank of Thailand has never questioned these. Obviously, if a large company uses coupons as a way of maximising their profits, this is no threat to financial law and order. But a small community working together to improve their own economy must be viewed with suspicion.

Bank of Thailand officials have also pointed to a law which allows only officially registered banks to use the word “bank” in their name.

Villagers say they were not aware of this. They had seen government agencies promote rice banks, buffalo banks, fertiliser banks, medicine banks, etc in hundreds of villages. All openly use the word “bank”. Of course, the government is above the law and poses no threat to public order. It is only when wellintentioned community groups inadvertently copy the government that danger arises.

The Bia Kudchum project was opened in March with Prime Minister’s Office Minister Khunying Supatra Masdit present to give it her blessing. Newly elected senators, academics, community development workers and newspaper columnists have noted that community currencies have many benefits – they stimulate local production for selfreliance; they encourage community cooperation; they help curb consumerism; they support Buddhist principles (bia notes are signed by the local abbot); and perhaps most importantly, because bia are interestfree, villagers can borrow and start trading without fear of falling into the debt trap.

Perhaps surprisingly, government officials agree with this. They accept that the villagers have acted with the best of intentions and they readily admit that the project will bring many benefits to the community. But despite this, they have demanded that officials have the right to make decisions about what a community can do with its own resources and have demanded that the Kudchum Community Bank close down while they make this decision.

Villagers are quick to point out that there is one group who will not benefit from the community currency – moneylenders. So in temporarily closing down the Kudchum Community Bank, the government is protecting people who lend illegally at usurious rates.

Officials from the government’s Bank for Agriculture and Agricultural Cooperatives (BAAC) who visited the village to investigate the community currency, were primarily interested in the amount of bia being loaned.

When they discovered that the community itself has imposed a limit of 500 bia per member, they were relieved. Such small loans do not threaten the BAAC’s own credit programmes, they noted. Had the community in any way threatened to offer a superior service to a government agency, then of course they could expect the full weight of the bureaucracy to stop them.

Government investigators are clearly concerned at a possible contagion effect. If the Bia Kudchum become popular, they say, then they could spread and challenge the baht. Villagers point out that the currency is valid only in the community and is backed by nothing more than villagers’ trust in each other. They don’t believe that the currency can spread. But of course, other communities might decide to copy their example, and rural Thailand could see hundreds of community currencies springing up, all helping to revitalise local economies.

But government officials can be relied on to prevent any such thing happening. Thanks to the alert actions of government officials, we can all rest safely, secure in the knowledge that the 30,000 Bia Kudchum have been taken out of circulation in order to protect national financial security.

The villagers’ intentions may be only for the best, but good intentions must not be allowed to stand in the way of global capitalism.

Harrison George 2000 Nation Multimedia Group
44 Moo 10 Bang Na-Trat KM 4.5, Bang Na district, Bangkok 10260
Tel 66-2-317-0420 and 66-2-316-5900; Fax 66-2-317-2071
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