A Caravana Tech

I walk into the modest community bank and soon run into Márcia Guedes. I ask her about Marco Rodrigo, who was not at the bank: he had gone to try to convince another businessman of the importance of accepting the prevê, a community currency. It was an attempt to strengthen the circulation of wealth inside Morro do Preventório and therefore improve everyone's lives. When Marco came back, he said that he hadn't quite succeeded this time: "Marco, I really like you and I'm a big friend of your dad's, but… I won't accept the prevê," said the businessman. Next, we watch as a Preventório resident, a fisherman, arrives at the bank. He's in trouble: fishing was not enough to make a living, and that would lead to immediate consequences: by the time the weekend arrived, he would no longer be able to provide basic food for his family. He had come in searching for an alternative - after all, his wife, an artisan, had already told him about the small but busy bank. After he arrives, he gains better comprehension of how a bank works - through a convincing explanation given by Sônia Faria - and decides to ask for an interest-free loan in prevês (at the time, in cash), which he will pay the following week [3].

WHICH BODIES CAN MANAGE CURRENCIES AND CREDIT?

The most varied bodies affect (and are affected daily by) what we can call monetary and credit technologies. In Brazil, for example, many have been historically excluded from the banking system [4]. The scene above exposes different aspects of daily life at the Preventório Community Development Bank (CDB) - located in a favela in the town of Niterói, in the state of Rio de Janeiro, Brazil - as it works to foster the circulation of its community currency and microcredit. The stability of that network is fragile: the businessman described in the scene was not convinced that the agreement on the Prevê (name of the local community currency) would really stand in the community - something far from unexpected for someone who lives immersed in an agreement (the use of reais, Brazil's national currency) seen as "almost natural", a given, as described by Bernard Lietaer (2003).

At a much smaller scale, similar to the “[...] the United States in the early nineteenth century, [in which] there were enormous physical variations in types of money." (Zelizer 1998) and every state agreed on its own currency, since 2008 the Preventório CDB has been building a new agreement on a locally valid community currency.

The greater Rio de Janeiro area is home to one of the 115 experiences of what is currently known as the Brazilian Network of Community Banks, which began in 1998 with Banco Palmas, from Fortaleza, in the state of Ceará. CDBs generally combine microcredit and community currencies permeated with strong local engagement. While community currency management - be it in the "creation" or lending of money - may sound strange to some, it is supported by fields of study such as economic anthropology: authors such as Karl Polanyi, for instance, emphasized the existence of both "all purpose money" and "special purpose money" (Dissaux and Fare 2017, 8). Today, the spectrum ranges from national and continental currencies such as the Brazilian real and US dollar (in the former case) to the prevê in Rio de Janeiro, Brazil, the Ithaca HOUR in New York, USA and airline miles (in the latter case) [5]. Dissaux and Fare (2017) adhere to the idea of monetary plurality, exemplified by the existence of "diverse forms and currencies (such as associative currencies)" (Dissaux and Fare 2017, 9; my translation). According to them,

the idea that currencies are built by States is contradicted by several other studies about the proliferation of monetary instruments produced by other bodies (Hart and Ortiz 2014, 473; emphasis added).

Social currency museum at Banco Palmas, 2015. Photo by the author.

Therefore, the notion of monetary plurality proposes that other bodies, in addition to States, are capable of managing currencies and credit. The discussion on who can issue a currency and who can define credit rules is current in many arenas, such as the debate on countries exiting the eurozone (Blanc et al. 2017). However, as we will see below, if the bodies that issue currencies are not necessarily restricted to the State, they are also not reduced to private banks and the so-called "Market", often understood as an entity opposed to the State or something that is "natural", whose laws hover above our heads regardless of territory or time.

BODIES IN PROXIMITY, BODIES WITH CREDIT: COMMUNITY AS POSSIBILITY

Brazilian CDBs can be seen as an alternative created by credit-enabling (and community currency-enabling) bodies that are in proximity to the bodies who are generally excluded from financial technology, such as poor people, black people and women in urban peripheries. The experiences of these community banks are linked to categories such as the autonomy of a collective, establishing relations between "monetary sovereignty" and "political sovereignty" and thus practicing "embedded sovereignties", or souverainetés imbriquées (Dissaux and Fare 2017, 12; my translation). In this methodology, a community serves as a "leaky bucket" whose poverty issue revolves much around the residents' habit of purchasing products and services from "big brands" and large companies outside the community (Instituto Palmas 2014). In contrast to this practice, CDBs create "corks" to seal up the "bucket holes" and keep wealth inside the communities. This leads to the two main tools in the CDB methodology: microcredit and community currencies (backed by national currencies, such as the Brazilian Real). Some authors translate the Brazilian experience as a form of commons (Hudon and Meyer 2016):

a set of institutions and institutional practices that respond to a principle according to which a more or less broad group is involved in a collective activity to produce tangible or intangible goods, which are placed at the disposal of commoners or a larger community according to democratic rules of self organization. (Laval 2016 as cited in Dissaux and Fare 2017, 2; my translation; emphasis added)

The category of the commons, the subject of Elinor Ostrom's (2009 Nobel Prize) work on the community management of natural resources, is approached by Hudon and Meyer (2016) from a different perspective: they argue that the Brazilian case of CDBs is an example of commons where currency and credit technologies are transformed as a result of the "local, public deliberation space" that they create. CDBs can therefore mitigate the potential for exclusion present in mainstream microcredit technologies, because they facilitate the rules of access for the local community (Hudon and Meyer 2016, 15). The differences between the approach of associative community institutions (community banks) and that of more formal microcredit institutions (large banks and corporations) rise to the surface when these two approaches interact. At one point, in 2015, Sônia Faria, president of the Morro do Preventório CDB, commented on the methodology used by a governmental microcredit agency: "[That's] not what we do. The guy [who wants the loan] will be preyed on [when he needs it the most] … It's time to give more love."

Faria was referring to two processes: granting credit and collecting debt. In community banks, loans are collected by agents who are practically neighbors and are always there. "The guy is too embarrassed not to pay back," she said. Co-founder of Banco Palmas Joaquim Melo stated that, for the "community banker", if a CDB lends money to one hundred people and seventy of them keep their payments up to date, the bank has fulfilled its mission and contributed to those people getting out of poverty; but in the "[traditional] banker's mindset, that's a tragic ... 30 percent default rate." (Melo 2016). Faria's perception is confirmed by more optimistic figures: data from the Preventório CDB between 2011 and 2014 shows a 15 percent default rate for both credit categories (Faria 2018), which is compatible with the national average in loans below one thousand Brazilian reais (Central Bank of Brazil 2015, 6, 4-15).

Another difference that sets microcredit technologies apart: while an agency reviews a loan application in a centralized, impersonal manner, consulting the centralized database of the Credit Protection Service [6], the Preventório bank carried out its assessment based on proximity, vicinity and family history. This difference also appears in studies on the credit market in the United States and Europe: "Old-fashioned, face-to-face interactions between bank employees and customers" - which De Blic and Lazarus (2007) refer to as a credit test or judgement (l’épreuve du crédit) - are now a routine (Fourcade and Healey 2019, 566; my translation). In Brazil, the routine doesn't necessarily include face-to-face interactions and proximity; it involves credit scores that take into account information such as addresses, monthly incomes, lawsuits, debt and the assessment of institutions such as the Credit Protection Service or Serasa Experian [7] (also feeding data back into them).

João Manoel Santos (also known as Seu Joãozinho), from Banco Terra, based in the state of Espírito Santo, speaks to over 20 community banks in the 2018 Solidarity Meeting (the first Global Meeting of Solidarity Development Banks). Photo: event coverage on Instagram (2018).

It is interesting to see how these views can incorporate the distance between those who need and offer money. Arguing that the economic and social spheres are always connected, some claim that "the real poor are those to whom no one has granted a loan" (Fontaine 2008, 36; my translation). Analyzing the importance of credit to the poor since the Middle Ages in Europe, Fontaine (2008, 35; my translation) maintains that interest rates were one of the indicators of "social proximity" between creditors and debtors, varying across more close-knit and distant circles - from one's own family to people outside of town, bosses, the "aristocracy, religious institutions or the village elite" (Fontaine 2008, 51; my translation). The closer the connection, the lower the interest rates; the more well-connected the debtor, the more difficult it was for the debt to be effectively collected. Consequently, Fontaine's argument reinforces the CDBs as community tools to foster proximity and cheapen access to money in populations known as "poor".

THE COMMUNITY CURRENCY AS AN ASSOCIATIVE BANKING TECHNOLOGY

What could be the limitations of microcredit as a community banking technology? The methodology of CDBs is seen by some as more "advanced" than Grameen Bank, created by 2006 Nobel Prize winner Muhammad Yunus, because the former "helps its customers get out of poverty more often." [8] However, an important limitation is related to the need to set up a "cash" fund (in Brazil, the reais). How can these funds be raised? There are many possible avenues, from crowdfunding to donations, international bodies and public policies [9]. There is another noteworthy example of a Brazilian community bank, which currently comprises the largest amount of transactions in the country (and possibly one of the greatest in the world when it comes to community currencies): "Around six million [Brazilian] reais paid every month in the form of basic income" (Sciammarella 2020). Banco Mumbuca was founded in 2013 by the Maricá city administration (a town located sixty kilometers away from Rio de Janeiro) to pay the monthly amount of eighty-four Brazilian reais to low-income families in a community currency: the mumbuca. Since then, the project has been taking the shape of a basic income scheme offered by the city administration to a growing number of citizens through a bank that has been expanding its autonomy towards becoming a true community bank.

Two aspects of the Mumbuca case are noteworthy as they pertain to fundraising solutions for community banks. First, the project is funded in large part by taxes on oil exploration paid to the municipality: for every mumbuca handed out to a beneficiary, one Brazilian real is kept by the CDB. No less important, Maricá is the Brazilian city that currently receives the most financial resources from this activity. The other aspect is how the circulation of a community currency can in itself generate funds for microcredit: in April 2018, the bank announced that the circulation of the mumbuca had raised thirty-three thousand Brazilian reais between February and May of the same year (Faria 2018). The creation of this community fund was made possible by a Brazilian law that since 2013 allows "non-banking" institutions to manage electronic payment schemes [10]. The CDB then began its interest-free microcredit program funded exclusively by the circulation of the mumbuca.

Enterprises who became clients of MumbuCred (microcredit offered in mumbucas) during a meeting between the CDB and city secretaries of Maricá, 2018. Photo by the author.

In Maricá, not only did the adoption of a digital community currency allow credit concession, but it also included a methodology to increase proximity between the bank and the community: in 2018, conversation circles on microcredit (known as “cirandas”) were launched, open to the public (Faria 2018), as well as “workshops to explain how the app worked and the possibilities that arise from its use. We were able to create bonds and [the beneficiaries] gained a better understanding of how the bank worked” (Sciammarella 2018). This virtuous marriage between a public policy, the community currency realm and community microcredit seems to be an interesting path to raise funds and boost the autonomy of CDBs. There are several experiences of community currencies backed by official currencies around the world – such as the lixo (Lisbon, Portugal) and the l’Élef (Chambéry, France) – but they are disconnected from microcredit initiatives [11]. This articulation can boost community ties, allowing decisions around credit concession to be made in close connection with the population. As a consequence, initiatives as varied as recycling and reuse of waste, women artisan groups, local and emergency consumption (as in real cases at the Preventório CDB), small housing renovations (Mumbuca CDB) and cultural collectives (Palmas CDB) can be supported.

Finally, it is important to mention other highly powerful experiences that have also generated community credit, albeit reasonably disconnected to "money". August Corrons points out that the type of community currency described so far amounts to less than 10 percent of a total of "3,418 projects distributed across twenty-three countries in all continents" (Corrons 2017, 69-70; my translation). The author highlights that over 90 percent of these experiences fit into what is called a time-based currency, including relevant experiences in the United States (such as the Ithaca Hour in New York), Japan and the United Kingdom, as well as mutual credit systems where members of a community lay out their offers and demands and "one person's credit equals someone else's debt, and hence the account balance is always zero" - emphasizing the case of the Local Exchange Trading System (LETS), especially in Canada, the United Kingdom, New Zealand and Australia (Corrons 2017, 70; my translation).

To make a more tangible case for the reader, I will end with two examples of Brazilian initiatives in the field of so-called collaborative cultural production [12]. Pedro Jatobá (2016; my translation) argues that they have implemented "a time bank with a 100 percent electronic currency". Initiatives in this field can be translated as solutions to channel output and wealth (a product, service or expertise) from a collective to people with little access to money. For example, to access a dramatic arts course at the Free University of the Vila Velha Theater (Salvador, Bahia), students paid part of their monthly tuition in a community currency known as "time": in other words, the students took on a debt that could be paid back in services that were needed by the theater (and were educational for the young actors) such as advertising, working in the ticket office, lighting, etc. A similar methodology was developed in a cultural space at the Federal University of Pernambuco: production company Colabor@tiva.PE offered to produce concerts, music videos, courses and other initiatives, all priced in "conchas" (shells). Loans granted in the social currency were paid back by the "customers" through their work in activities from security at concerts to gardening.

These arrangements are also associative credit technologies in which credit concession distances itself from practices such as credit scoring (as well as the impersonal aspect, the independence between creditors and debtors and also the premise of the existence of "money") and reflects the notion that "society would not exist without a currency, as currency is constitutive of debt, and debt relationships - between individuals themselves and between individuals and society as a whole - are the foundations of society in its entirety" (Dissaux and Fare 2017, 7).

[1] A favela (slum).

[2] As many favelas in Latin American cities, Morro do Preventório (Preventório Hill) is located in a hilly part of town.

[3] Scene inspired by my experiences at the Preventório Community Development Bank, adapted from Faria (2018).

[4] Only 53 percent of the Brazilian economically active population has a bank account, and only 7 percent make transactions more than once a month (Gonzalez 2016); 88 percent of Brazilians who use banks "cash their salaries and nothing else" (Alves 2016; my translation).

[5] See more at <​https://www.investopedia.com/terms/i/ithaca-hours.asp>.

[6] See <https://www.spcbrasil.org.br/>.

[7] See <https://www.dicionariofinanceiro.com/credit-score/> and <https://editalconcursosbrasil.com.br/blog/mercados_credit-scoring/>.

[8] As per the statement given by Bernard Lietaer, a Belgian specialist, considered one of the greatest in his field and who passed away in 2019. See more at <https://www1.folha.uol.com.br/fsp/dinheiro/fi0202200907.htm>.

[9] For an example of a crowdfunding campaign associated with the Preventório Bank, see <https://comite.bancopreventorio.org.br/>​. Banco Palmas first put its community currency in circulation through external donations (Faria 2018, 62).

[10] Especially the electronic payments law (Law no. 12685 / 2013), which allows non-financial institutions to manage electronic payment systems and be compensated for it. In the eyes of the Central Bank of Brazil, community banks are formally not banks, but "fintechs". This law played a fundamental role in encouraging the future of social currencies in Brazil to become more digital.

[11] See more at <https://www.rtp.pt/noticias/pais/pago-em-lixo-a-junta-de-campolide-faz-negocio-para-premiar-a-recicl agem-e-a-compostagem_a1202601​> and <​​https://lamonnaieautrement.org/elef>.

[12] See more at <https://transforma.fbb.org.br/tecnologia-social/produtora-cultural-colaborativa>.