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Simulation starts to…simulate

Simulation implementation has made substantial progress. By using SimPy and python, we have been able to reach initial goals in integrating different elements into the simulation.

First we started an effort in getting some variables defined, how many members and businesses we want to have at start, how many quids they should get initially credited, etc.

The design is built on a core objects package, which we plan to be able to re-use for the production application, and a simulation package. We work with the concept of a policy, which implements the tweaking parameters of the quids management, and of a scenario, which is meant to provide an abstraction of the economic environment in which the LQN is running.

The simulation is now executable. We have a simple policy and a simple scenario for now (which are not that simple neither, but are meant as stepping stones for iterative development). However, for meaningful results, the simulation needs to get more details, essentially more feedbacks and behavioural modeling of members and businesses.

We would still be very happy to welcome python developers, as the code base expands and complexity increases. Knowledge of SimPy would be also most welcomed. All code is open source, and we host the master branch on This is the clone URL.

Posted in Development, Simulation.

Kilkenny and the Quid: Fertile grounds

This week, very promising meetings between The Liquidity Network initiators and local authorities as well as the public in Kilkenny, Ireland, took place.

The situation in Ireland due to the financial crisis is worsening. Local councils are forced to cut back expenses, and might be pushed to more cuts in the next months.

Out of these conditions, local authorities develop an interest in being able to still pay wages to their employees. Scenarios, in which they pay them wages partly in Euro and partly in alternative currencies, are being discussed. Continued…

Posted in Adoption.

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The usual story of a debt-free national currency

I am reposting this article from the, published 7. July 2009

This article by Louis Even was published in the January-February, 2004 issue of “Michael”.

It is illustrative of how a local community could create “sufficient” and non-inflationary money streams to revive the economy.

Louis Even:

“Guernsey is a small island located in the English Channel. An Anglo-Norman population. This island is located closer to the French coast than to the English one.

At the close of the Napoleonic wars, the island, like several countries, was in pitiful condition, both pydically and financially.

No money

Sea walls, roads, markets were needed.There was no manpower shortage. but there was no money to pay for these works.

The money used by the people on the island was the money from England, the pound sterling. But, like after any war, the financiers were calling back the money advanced to finance the slaughter, and the pounds sterling were very scarce everywhere.

The island had an autonomous government, “the States of Guernsey.” So it had the rights inherent in all sovereign government, among other rights, that of regulating the volume of money incirculation in the country. But, no more ethan any other country, the States of Guernsey had thought of exercising this sovereign prerogative.

An intelligent governor

The island was especially in need of a new market house, and a committee was set up to take care of it. The committee went to see the governor to explain the situation to him:

“We need a new market, but we have no money to build it.”

“With what material are you going to build a market?” asked the governor.

“With stone and wood.”

“Do you have it in the island?”

“Certainly, and in plenty.”

“Do you have workers?”

“Yes again. But it is money that is lacking.”

“Could not your parliament issue money?” asked the governor.

A new idea!

This idea had never occurred to the committeemen, who had never analysed the money question. They knew where to get money when there was some: but they never wondered where money begins or can begin.

The method of taxing when there was money was quite familiar. But the method of injecting the money that is lacking, and of taxing only after, was something new to our administrators.

Issues of national currency

An estimate of the cost was prepared and the States printed the money required, which was paid to those who either worked on the project or furnished materials for it.

As the new currency was paid out into circulation among the people, exchanges were being expedited. The wage-earners went to the shopkeepers, the shopkeepers went to the producers, the producers bought enough to increase their production.

The currency was accepted everywhere. The government took measures against inflation by decreeing that money would be withdrawn by taxes, so it does not accumulate. And, in fact, the money was retired on schedule by taxes. But, as the increasing activity required a corresponding volume of money, other issues were brought out by the government for other works.

On October 12, 1822, the new Market house was completed and opened. Not a penny of public debt on this public enterprise.

The bankers intervene

At the time of the original issue, there was no bank upon the island. This explain, without doubt, why there was no opposition to the issue of State money.

But ten years after the first issue, the island had become so prosperous, thanks to the activity allowed by a sufficient volume of money, that the banks of England had en eye on this island.

English bankers set up branches in the island and brought the population around to orthodox rules. “It was unsound,“ they said, “to let the government finance its enterprises without getting into debt.”

The bankers did everything to stop further issues to introduce the system of interest-bearing loans to the government and to withdraw from the island the State money that had been paid out into circulation.

There was some resistance, but the bankers won their point, with their usual methods, and on October 9, 1836, the States of Guernsey had abdicated their sovereign prerogative over the control of the volume of money. From then on, the amount of the national currency decreased gradually, and was replaced by money issued by private bankers in the form of loans getting the island into debt.

Nevertheless, there is still about 40,000 pounds sterling ($200,000) of national currency outstanding at this date in the island. (According to Gertrude M. Coogan in Money Creators, published in 1935.)”

Posted in Case study, Debt-free money.

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Simulation progressing

Thanks to Stephen Butler joining the project, the simulation work now is taking shape. We code in the Python programming language.

Stephen has done some work in investigating tools for the improvement of code quality. Thanks to these efforts, we are setting up virtual environments for the simulation; this makes it easy to replicate development on any machine, and reduces dependency complexity and management. We use the virtualenv tool for this.

Also, we are setting up testing infrastructure. In fact, we aim at a high coverage of tests for the functions the code is supposed to do. Of course, for anyone in software development, that means improvement of code stability and quality while facilitating integration, especially when multiple programmers work together (and, like here, not co-located). We think we’ll use nose as a python tool for continuous automated testing.

As a next step, we’ll implement some first core objects. As we favor agile development, we strive to include the user in shaping those core objects. For now, members of the non-technical stream of the project will take the role of the user.

We are quite excited as things now move on.

Posted in Simulation.

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Uruguay to launch new liquidity system

Quoting from Tao of Money


The Executive Power prepares details for a new system of payment which will be adopted to stimulate micro and small businesses.

In two months, the government will release a new way of payment, a transaction network, which will allow micro and small business to interact among themselves, through a new alternative currency, and at the same time to face their obligations with the State.

This was announced recently by the Minister of Work, Eduardo Bonomi, during his participation in the talk “International Crisis and Uruguay 2009”, organized by Montevideo City Council.

Minister Bonomi said that the development of this new system is the result of working together with the Ministries of Work, Economy, Industry and Energy, and with other governmental organisms, as well as state banks and state insurances and city councils of Montevideo and Canelones. Moreover, state companies will take part in this new system as well.

“This new network of transactions will allow small and medium businesses access to credit through an alternative currency, but it will be exchangeable throughout the whole country, where they will be able to pay for petrol, taxes and it will be redeemable into money”, he confirmed. Nevertheless, he made it clear, that this project is about giving support to the production and it’s not a credit for consuming. “Next week I’ll have a talk with the Meyer of San Jose (neighbour city), so that he enters the whole metropolitan area to the system. The idea is that city council providers can also trade through this currency”, said Bonomi. In a first stage, this system would include just micro, small and medium businesses, but in the future it could also absorb privates to the network.

This initiative counts with the support of the ILO, IADB (Inter-American Development Bank) and the General Inter-American Secretary. This project aroused a lot of interest among the region countries such as Argentina, Bolivia, Ecuador and Venezuela, which means that in the future inter-regional transactions may be possible.


All over the world similar systems already exist. In this case, the different element is that the administrator will be the State. It works as a network of payments through electronic debits and credits. To join the system the companies must request approval of the State Bank. From there on, the company will be assigned an account in the system. This company will be able to order the payment from its account to be credited in favour of a state organism or a private member of the network. Accounts will be balanced periodically and participants advised of their trading position.

This amount will be redeemable into national currency or used to pay for petrol or taxes. Bonomi said that this idea was presented to the National Association of Micro and Small business and to the Uruguayan Confederation of Cooperative Entities and other cooperatives, arousing great interest among them.


The development of the network doesn’t create any costs for the country, since it was originated in cooperation with the STRO Foundation from Holland, which supplies the network model, known as C3 (Consume and commerce circuit). The name for the virtual money circulating through this payment scheme is called “internal liquidity”, although the technicians working on its development adopted a more native denomination: “charrua” (name of the Indians, that inhibited Uruguay before the colonisation, and who were completely exterminated, therefore it is ironic that the Uruguayans are called like that even nowadays, and more that this name it’s used as a icon of local identity)*.
However, in Uruguay STRO chose a new approach, which might also work out well for other C3s. Small businesses cannot obtain the same payment guarantees that large businesses receive. C3 Uruguay is going to work with a guarantee fund that will assure small businesses of payment on delivery in internal C3 money. In such case these small businesses do not have to wait for months until they receive payment and are therefore able to maintain their stock level. In the capital Montevideo, where over a half of the Uruguayan population lives, the same method of payment on delivery in internal C3 units to small businesses will be followed.

For STRO this new C3 approach is a fascinating experiment, because large partners have joined in. We therefore hope to gain more insight in what a C3 business network can do with a complementary currency in a poor country.
Access to the credit
Operations would be 100% guaranteed and the system will allow access to low cost credit -around 10 to 12% to small business that aren’t currently covered by the traditional banking system. This will also improve competitiveness of this economic unit and its formalization will be stimulated, reducing administrative and transactions costs at the same time. This network won’t create inflation dilemmas, since the financing will be channelled towards production, which will broaden the supply of goods and services.
National System of Guaranties
A guaranty fund of 5 Million US$ is planned to be established as the initial capital to stimulate the credit for small businesses. (What backs this fund?)
Interesting information about Uruguay’s current financial situation

Posted in Business networks.

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The Liquidity Network operates a technical group which has the goal of implementing software to further the adoption of the Liquidity Network implementation proposals.

We have had intensive discussions among this group and those involved with strategy and working with potential adoptors and have come up with an interim plan for development.  Here is a summary of the plan so far:

  1. We adapt an existing first go at a simulation by Fabio Barone to produce a robust set of well tested software modules that will form a core of the Liquidity Network for now.  We will try to ensure that as much of these can quickly be used in a production environment.
  2. We post this software with a Open Source licence in a repository.  Currently this repository can be found on GitHub here.
  3. We will encourage other interested developers to become part of the team.  If you are one please email us at info __ at __ feasta d-o-t org (email adress altered to prevent spam).

Posted in Development, Simulation.


In order to test our own thinking and to have a tool on which to share discussions with interested parties, we aim at developing a simulation of the system.

Granted, simulations are a tricky thing. They can never cover the whole complexity of a complex system – like the economy. For us though, the simulation is not a means for academic exercise or to model as close as possible reality. It would serve the purpose of getting a feeling of the dynamics of such a system and to get a communication vehicle.

Of course, we could easily set up a 3 years monster project to apply the best methodology, consult relevant information and implement a thoroughly elucidated theoretical foundation into simulation software. However, we don’t think we have this time.

We focus on getting a compromise between speed of implementation and sufficiently significant modeling, allowing us to spot trends and tendencies in the system.

Ideally this would provide us with information on how to parameterise the system, to eliminate any obvious fallacies and to feedback into the theoretical framework.

We are currently validating assumptions for the simulation, which we want to setup as an agent based system. On the feasta website, there is a thread discussing the assumptions for the simulation.

Posted in Simulation.

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Welcome to The Liquidity Network. As of today, this site is now live. Our goal is to introduce a debt-free currency in Ireland, where economic pressure due to the global financial instability is becoming acute.

We need to balance the need for a quick implementation due to circumstances with a sound standing concept and a stable architecture.

We invite you to scrutinize our ideas. In Rationale
we explain why we think there is a need for the “Quid”, as we dubbed the new currency. The  Outline pages give an introduction to how we envision the system to work. Have a look at Implementation to get some more details of how we think it could work.

The issues are complex. We welcome any comment and invite you to participate in our conversations to make it happen: Participate

The current crisis is man-made and is built in into the current monetary system. We hope to be able to alleviate the shortcomings these difficult times bring and to help our families, friends and fellow citizens in introducing an alternative.

Posted in Uncategorized.

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