Solidarity Currency in El Salvador

In the parish Sinincay, located about 15 minutes northwest of Cuenca, dozens of traders agreed since last April 10 at an alternative way to trade than the dollar, the UDI (Solidarity Exchange Unit) for the purchase of of certain premises in the area.

However, this system is already generating mixed reactions in the country. "The only means of payment or currency in Ecuador for financial transactions by financial institutions or through the dollar.Therefore, the circulation of money substitutes is prohibited and punishable by law. " This gave the Superintendency of Banks yesterday outside the payment system.

To some experts it is a parallel currency, which would represent a first step towards de-dollarization. In exchange for your minded is a complementary instrument operates successfully in other countries for the benefit of the popular economy and solidarity.

The UDI were printed on paper money in Holland, with assurances to prevent forgery. These can be redeemed by members of the credit union's Integral and can be used only in the parish, as long as they deliver dollars for what they have monetary support, said Javier Felix, Fundación Pachamama, one of the three entities that promote this pilot project. The other two are National Network of People and Solidarity Finance of Ecuador (Renafipse) and STRO organization of the Netherlands.

Felix explains, this kind of social currency or means of supplementary payments, manage to promote sales within the community and avoid unnecessary departure from the jurisdiction of foreign exchange and generate a sense of community.

The idea was that the sale of products made and delivered to a lower interest loans in UDI. So productive work at a fair on April 10 in which producers and partners exchanged their dollars for UDI, and made the trade. For Felix, there is no intention to create a system to replace the dollar.

In contrast to Mark Lopez, a former member of the Central Bank Board, this process involves the creation of a parallel currency with no real backing. In the case, for example to have a run in the cooperative, the lender can enter into liquidation by illiquidity.

For Lopez, what is happening is like what happened in Argentina with plantains and other parallel currencies that were created. "It's a monetization of the economy and is a step towards de-dollarization because currency is being issued without the backing for the country," he said.

According to the main Renafipse, Rodrigo Aucay, the Central Bank's role in this case lies in the monitoring and supervision of the project to complete it, point out strengths and weaknesses.

About 50 Sinincay traders involved in these exchanges are part of a cooperative agreement with the Integral. Their views are diverse.Viñanzaca Miriam, who owns a beauty salon, says few people who cancel their services with UDI, because in his view there is still mistrust.

Others are betting the method. "It's good that money does not go out of our parish, to try to keep the economy here and mobilize around the city," Orlando said Gordon, who owns a restaurant.