Ecological money and finance—upscaling local complementary currencies

Abstract

This paper puts forth a new pathway to sustainable policy to upscale the transformative power of local complementary currencies. It first reviews the mechanisms by which complementary currencies re-embed monetary circulation within sustainability and biomimetic resilience criteria. It then puts forth a prototype policy pathway whereby private banks swap SDG impact certificates of their complementary currency loans against new reserve assets held at the Central Bank. It finally provides analytical insight on this prototype policy with a a new PK-SFC model comprising 106 accounting and behavioral equations. Simulations show that the prototype policy generates short-lived economic expansion, increases banking stability, and induces structural change through increased systemic capacity for evolution, resilience, and fitness for evolution. We finally discuss the practical implications of our results for sustainability policies.