How Money Systems Work Publications Payment Methods Glossary of Terms The Money Conference

 

Currency Systems
Backed Currencies Transaction NetIthaca HOURS
LETSNational Currencies
ROCSTime Dollars
Complementary Currencies

ROCS - a Robust Complementary Community Currency System

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

Benefits of the ROCS model:

ROCS combines the most robust features of the various complementary currency systems in use today. It is designed to resist both external shocks (e.g. a crisis in the national currency) and internal management mistakes (e.g. as in all mutual credit systems the quantity of money is automatically adapted to the needs, as the parties agreeing on a trade create the currency at the moment of the transaction).

R

O

C

S

Robust Complementary

Community

Currency

System 

 

Synthesis

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

How ROCS is issued:

ROCS money (like LETS and Time Dollars) is issued by participants as mutual credit. This means that the quantity of currency issued is automatically sufficient and does not depend on the judgment and effort of a central authority. When too much money is issued, the local currency will inflate or even become completely worthless; when currency is underissued, the problem local currency was meant to address--too little trade among people in the community--will remain. So it is not a trivial task for anybody or any group to guess the correct quantity of money to issue, because that ideal quantity will continuously vary according to the rate of acceptance of the local currency, which will change over time; and the overall state of the local economy (including the conditions of the economy in the "normal" national currency), which will also change over time). Mutual credit solves both these problems in a self-organized way.

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

ROCS are measured in HOURs.

Its unit of account is the HOUR (as used in Ithaca HOURS or Time Dollars), because HOURs of service are measured the same independently of place and circumstances, and so are less likely to be overissued and lose value.

Using the National Currency as a reference, as is implicitly the case for LETSystems (where 1 Green Dollar = 1 National Currency Unit) or WIR (where the unit of account is the Swiss Franc) is more convenient for convertibility and easy pricing, but anchoring a local currency to national fiat money leaves the local currency system vulnerable to any crisis occurring in the national currency; thus the importance of this feature will depend on the particular national currency chosen as reference (e.g. for the WIR it worked well because the Swiss Franc has been the most stable national currency in the postwar era).

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

ROCS exchanges are negotiable.

Participants may negotiate the number of HOURs to be exchanged in any particular transaction: One hour of a service requiring extensive training, skill, and experience, or expensive equipment, or posing high risk, may justifiably be worth several hours of less demanding work.

By leaving it to the negotiating parties to fix the number of "standard" HOURs of common service a particular service requires, one solves the problem of having to pre-determine the value of everyone's time, as was attempted unsuccessfully under the Soviet planning system. Outside of very narrowly defined communities where it is generally accepted that everyone's time has equal value (retirement homes, for example, where Time Dollars are very popular), systems enforcing a certain exchange rate for everyone's time will chase away those people who are exceptionally talented, thorough, efficient and/or hardworking, by not providing reasonable value for their service.

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

Structural incentives in the ROCS system:

Demurrage is applied to both positive and negative ROCS balances.

Demurrage is a time-related charge, similar to a negative interest rates, that helps keep resources circulating in trade and allows communities to raise resources in local currency for whatever the community can agree upon (e.g. covering overhead expenses for operating the system; funding a cause that people can agree upon, etc.) Demurrage is usually intended to

  1. signal that large balances are not in the community's best interests (because they can destabilize the system when people die or otherwise withdraw from the system);

  2. encourage all participants in the system (and not just the originators) to "sell" the system to new people, increasing thereby the trading opportunities for everyone; and

  3. provide a built-in incentive to consider longer-term sustainable growth over short-term windfall profits (by discounting future cash flow, demurrage currency provides a higher value for future income than for current income)--i.e. the reverse of what "normal" interest rates do for national currencies.

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

Applications of the ROCS system:

At this point, we're not aware of any complete operating ROCS systems. Please let us know if we missed one.

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

Related Resources

See our table and graph comparing ROCS to other money systems. We're not aware of any other ROCS-related sites. Please let us know if we missed one.

Benefits How Issued Unit of Account Exchange RateIncentives Applications Related ResourcesInteract

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How Money Systems Work Publications Payment Methods Glossary of Terms The Money Conference


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