faqs

A system for creating and managing local electronic trading currencies in a way that encourages local trading and improves cashflow.

There are a number of potential models for starting a new network. One option is for the local council to start spending Quids (each network will have their own name for the currency units) into circulation by part paying subcontractors in the new currency. At the same time the council agrees to take them back in payment for rates and other local charges. This is the start of creating a circulation of currency, and these networks can be expanded as the council (or other sponsors) spend more currency into the local economy.

In the trial phase of the network, Quids are effectively IOUs as the council must accept back the full amount that has been issued in payment of rates and other local charges. If the network proves successful and moves to the full version of the system the trust will decide how much the council must accept of what period of time.

People are encouraged to trade in a widening network by paying bonuses based on trades that strengthen the network and creating wider chains of use.

There's both a stick and a carrot. The stick is that the workers know that, because their council's income has been cut by the current crisis, they may have to work shorter hours or even be laid off if they don't accept some quid. The carrot is the benefits offered by a LQN system. Quick and easier payments, automatic record keeping and bonuses where they make good use of the system.

As all the quid in a system would have been given to one accountholder or another, the withdrawals would continue until no units were left and the system could be wound up. All the effort that people put into gettting it started would have been wasted, but no-one would end up in debt or having lost money.

The software required to run a network is being developed by Feasta, a non-profit economic thinktank and the rights to it will be transfered to a non-profit umbrella body. The Umbrella Body will license the use of the software to member networks subject to the payment of an annual fee to support its activities. Besides software, the UB will provide networks with legal advice, political and media support, and help with selecting the best technologies. The directors of the UB will all be chosen by member networks.

Yes, from traders and other individuals. But the trust itself will never buy or sell quid for other currencies or recognise any exchange rate between them. If it did it would be in breach of the law.

Yes. The initial trial phase lasts 3-12 months and has some limited functionality and during this period the council must accept back all the quids they issued, ie. the currency is fully backed by the council. Once the network is deemed to be a success, the live phase can be implemented where additional currency can be added to the system but the council can offset it's bonuses against issued currency and there is no longer responsible for the all the issued currency. The trust will make the decision when and if to move from the trial to full network.

A liquidity network is purely for buying and selling and not for saving or borrowing. While it is a core principle of the Liquidity Network to create money without creating debit that does not preclude loans taking place between members of the network.

We see a paper currency and an electronic Liquidity Network as serving different purposes.
A paper currency is easier to get started and is a good toe in the water. However it greatly increases the workload for local businesses so it's size is limited. Paper is also more robust in the event of an economic collapse.
A Liquidity Network can put far more new currency into circulation while making transactions quicker and easier. It requires considerably more commitment from the local community to get started.

In the early stages, it is backed by the willingness of the local councils to accept it as equivalent to the euro. However, once the councils have earned enough bonuses to cover their advances, they don't have to accept quid at all. Their backing can be removed. From then on, it's up to the other users to back it by accepting it for their goods and services.

Lots of community currencies have been set up in the past. What's different about a liquidity network is that, because it is electronic, the number of quid in circulation can be fine-tuned. The technology for doing that has not been available before. No previous currency system has had the ability to give extra units to users who are expanding the system and take previous bonuses away from those who don't need them because they are not trading actively enough.

Additional currency will be available to spend locally.
Using the LQN System for transactions is quicker and cheaper than banks and credit card companies.
Business who spend their Quids widely and help to grow the network, will be rewarded with bonuses.
The LQN System automatically generates invoice and payment records reducing administrative workload.
Adding a "Pay with Quids" link on existing websites is quick and free.
Adding loyalty schemes, special promotions is part of the service provided by the LQN System.

An online accounting and banking system is available to make it easier than in euros to pay other businesses that operate with Quids. All invoice information is sent through from the supplier, no need to enter it onto each businesses accounting system. No need to request statements or copy invoices, they are all available online whenever they are needed. You can even setup the system to automatically pay invoices as soon as you approve them and there is sufficient balance in your account, giving you the best chance of earning an early payment discount from the system.

You can pay part or all of your motor tax (rates and water charges) with Quids. Simply substitute Quids on a 1 for 1 basis with Euros.

A paper currency is an open system. Once the currency is issued the is no control or record as to where the currency travels. The Liquidity Network is a closed system so every transaction is recorded on the system and so it is possible to see how the system is being used and manage the flow of currency. It is not possible to withdraw currency from a closed system, for example, in the form of a paper note, it is only possible to spend it away. This has two major advantages. It makes fraud much more difficult because to use the currency you must have registered on the system and all transactions are recorded on the system. The second advantage is that should there be a 'run on the bank', currency cannot with withdrawn so if you think the currency is losing value all you can do is spend it, and by spending it help to support the currency.

For traders, paper money creates additional work to record transactions and hold change, so there are downsides for local traders to want to handle the currency in the long term. With a purely electronic currency in a closed system, the transactions are automatically recorded, there is no need for change and the cost of transacting in the local currency can be less than in euros. This gives local traders direct benefits and will incentivise them to use the currency widely.