Fiscal Localism On Rise In Germany

The Havelbluete, the Augusta and the Chiemgauer might sound like the names of locally brewed beers, but they are in fact micro-currencies which, like micro-breweries, are in abundance in Germany. There are more than two dozen local currencies in circulation, and 40 or so initiatives are about to start printing their own banknotes. These notes are not gimmicks. They're recognized legal tender — at least within each local region.

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In Germany you can hear people speak of the Havelbluete, the Augusta and the Chiemgauer. They may sound like the names of some locally brewed ales, but they are in fact micro currencies, which like microbreweries, abound in Germany. More than two dozen local currencies are in circulation.

NPR's Eric Westervelt went to southern Germany to try to find out why such monetary localism is on the rise in Europe's largest economy.

ERIC WESTERVELT: In the sleepy Bavarian town of Stephanskirchen, the local farmer's market is bustling this morning with shoppers trying to beat the summer heat and pick the freshest goods.

(Soundbite of farmers market)

Unidentified Woman #1: (Speaking German)

Unidentified Woman #2: (Speaking German)

WESTERVELT: Artisanal pork and organic fruit and vegetables aren't the only locally made products exchanging hands. The regional currency, the Chiemgauer, is as well. Walburger Sandbueckler is a local beef and pork farmer. At the front of her refrigerated stall, prominently displayed near the regional delicacy, Weisswurst, a sign in German reads, Chiemgauer accepted here.

Ms. WALBURGER SANDBUECKLER: (Through translator) I think it's a great initiative because it means that the money stays within the region. It's a kind of a give and take principle. So when I take the Chiemgauer here, I also spend the currency here. That's the main reason why I take part.

WESTERVELT: The currency, based on the euro, one Chiemgauer equals one euro, is printed locally. It aims to promote regional investment while also helping the community. It's not backed by any government body. But what used to be illegal gray area is now legal tender here. The Chiemgauer, named after a region in Bavaria, is a depreciative currency. It loses two percent of its value at the end of each quarter. So that encourages people to spend, something the frugal Germans are notoriously unwilling to do.

If you don't use it fast, the currency has to be topped up by purchasing a dated stamp. Sixty percent of the fee you pay to bring the currency back up to full value goes to local nonprofit groups. The currency is now accepted in more than 600 regional businesses from banks to bread shops. And Andreas Stuerzel's information technology company in Rosenheim.

Mr. ANDREAS STUERZEL: You are forced to spend money, it's quite good thing. It's very easy to say I change 100 euros in Chiemgauer and I can spend it within two or three weeks. I can pay a doctor in Chiemgauer. I can pay an architect in Chiemgauer. Most pharmacies in the region you can pay in Chiemgauer.

WESTERVELT: Local currencies such as the Chiemgauer, the Havelbluete and the Nahgold have been around for nearly eight years, almost as long as the euro. In all there are now some 60 local currencies up and running or planned for Germany. Now, if there's a euro-skeptic, Germany-first tinge to these local currencies, or even some nostalgia for the good old days of the Deutschmark, most people here deny it.

Local currency organizers see themselves as progressives who are softening the hard edges of a global economy. One of the programs partially subsidized by the Chiemgauer's profits is an after-school club.

(Soundbite of school)

WESTERVELT: With a turnover last year of four million euros, or rather, Chiemgauer, the Bavarian micro currency is Germany's most successful. Particularly now as the German government begins to implement its largest austerity program in the post-World War II era.

The alternative source of fundraising may help cushion the community from some federal and regional budget cuts. Marion Bergmann runs the after-school program.

Ms. MARION BERGMANN: (Through translator) We benefit directly from the local currency. The money made from the top-up fees goes towards books for the children. We even buy the groceries for their meals with it so it helps our bottom line and saves us money.

WESTERVELT: In the wake of Europe's sovereign debt crisis, some EU member states have criticized Europe's largest economy for what critics call a new kind of German economic nationalism. Yet the success and number of regional currency initiatives here suggest that what's actually happening in some parts is a new kind of German economic provincialism, complete with funny colored money accepted by more and more small businesses.

Eric Westervelt, NPR News, Rosenheim.

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