Concept
Demurrage
A holding charge on money — value that decays over time if not spent. The opposite of interest, which rewards money for sitting still. Proposed by Silvio Gesell (1862-1930) as a way to keep money circulating in the productive economy rather than accumulating in unproductive savings. Tested famously in Wörgl, Austria, in 1932-33, where stamped local currency revived a depression-stricken town's economy until central banks shut it down. Modern examples include the Chiemgauer (Bavaria, Germany, 2003-) and various complementary-currency designs.
The mechanism
A demurrage currency loses value over time at a fixed rate — typically 2-12% per year, applied through stamps that must be affixed to maintain validity, or through digital expiration of unused balances. The holder is incentivized to spend before value erodes; merchants accept the currency knowing the same incentive applies as it circulates further.
The Wörgl experiment (1932-33) issued stamped schillings requiring monthly 1% restamping. Velocity exploded — the [[local-currency|local currency]] circulated 14× faster than national schillings. Unemployment fell, infrastructure projects completed, the town recovered ahead of the surrounding region. The Austrian National Bank shut the experiment down in September 1933.
Modern uses
- Chiemgauer (Bavaria, Germany, 2003-) — 2% quarterly demurrage; €8M+ annual turnover; one of the longest-running demurrage currencies in operation
- Various local-currency pilots — Berkshares, Ithaca Hours, and others have considered demurrage; few maintain it
- Cryptocurrency experiments — Freicoin, Circles UBI, others have implemented demurrage in digital form
See also
Auto-generated from this entry’s typed relations: frontmatter, grouped by relation type so the editorial signal isn’t flattened.
- Shares approach with: [[local-currency]] · [[regenerative-finance]]
Sources
- The Natural Economic Order, Silvio Gesell (1916)
- The Future of Money, Bernard Lietaer
- Wörgl experiment historical documentation
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