Japan rides hard times with tokens of 'love'

A decade of economic lethargy means more Japanese are working for "peanuts" – and "thank yous" and "love."

Each is a new local monetary unit. As the names suggest, they are the softest of currencies.

In Yamato, near Tokyo, one rabu (love) will buy an hour of babysitting or a massage or a discount on groceries.

The rabu is the most recent and ambitious of 130 community currencies that are springing up in regions across Japan to boost local economies and encourage closer ties between residents.

There are similar programs in about 50 North American towns and cities. But Japan – for reasons of culture and circumstance – is emerging as a global leader in the concept.

The new tokens of exchange are unlikely to challenge the yen any time soon, but they are fostering a new way of thinking about money and barter in Japan that stands in sharp contrast to the rise of megacurrencies like the euro or impersonal electronic transactions carried out over the Internet.

In recent years, local governments have launched their own currencies in the hope of reversing the decline of once-close knit communities. Most have names reflecting their aims. While 90,000 shop- keepers and residents are able to give and receive "love" in Yamato, the residents of Okamura island exchange dan dans (thank yous) in the local dialect.

While Yamato's love is tendered in tokens or – rather unromantically – through an integrated circuit card, a trading system near Lake Biwa in central Japan deals in clay. Elsewhere the monetary alternatives include bamboo, swatches of silk, and wooden disks.

Many of the communities are attracted to the new currencies are those where real cash is in short supply and time is more plentiful, either because of large elderly populations or high numbers of unemployed. Last year, Kamagasaki in Osaka, which has the highest proportion of homeless in Japan, introduced the kama for the increasing number of day laborers who have been unable to find work.

In Chiba, people now work for "peanuts," the name of a cash alternative that is based on a famous local product. Like most of the systems, it is small in scale but growing fast. As of last month, 540 residents and 50 shops had signed up to the peanut.

"The peanut has really taken off," says Mitsuya Katsushi of the local Community-Building Support Center. "The number of users has doubled in the past year."

Local shopkeepers report a 5 percent increase in sales since the launch of the system 3 years ago, and even attribute the spruced-up appearance of the central promenade to its introduction because the elderly women who tidy up the flower beds are paid partly in the new currency. But the biggest gain, they say has been in conviviality because the "rules" of the peanut system require users to shake hands and cry "Amigo" whenever they exchange the currency.

Local currencies are nothing new in Japan. The concept reportedly dates back to 1973 when a group of Osaka women established a "volunteer labor bank" to emphasize and use the value of unpaid housework.

But the idea has really taken off in the past few years in part, say analysts, because of growing economic uncertainties, but mostly because local authorities are looking for new ways to unite communities in which individuals are increasingly isolated.

Sawayaka Welfare Center, a volunteer group that is campaigning for greater use of regional currencies, says the rise of such systems reflects a change in society.

"Sadly, ties between neighbors have become very weak so people are reluctant to just ask for favors. But these currencies are a stimulus to share services and deepen relations between people," says Yasushi Inose, a spokesman for the group.

The dan dan is a case in point. The program was launched in 1995 to promote intergenerational communication on Okamura, a remote island that has a rapidly aging population. Faced with an outflow of its younger members, the community has used the dan dan to encourage elderly women to teach young women how to wear a kimono properly in return for being driven to the shops.

Since a best-selling book on the subject in 1999 and wide-television coverage, a plethora of similar programs have been launched around Japan. Trust between members of the system is essential because the tokens and vouchers are, for the most part, very easy to forge. In one sense, the systems work like theme parks vouchers that can only be used inside a fenced-off area and for rides and popcorn.

But some local authorities have big plans for their local money systems. And none more so than that of Yamato city, where local officials hope the "love" could one day oust the yen as the main currency for transactions between local people.

"We would like to build a more self-sufficient system that would allow people to pay for everything they need to live in Yamato with love," says Tomoyuki Akiyama, of the Love Support Center.

Economists see these small steps towards a multi-currency system as a sign that consumers and municipal authorities are trying to be less dependent on central government as they lose faith in the established financial system, which has been teetering on the verge of collapse for almost a decade.

Noriko Hama, chief economist of the Mitsubishi Research Institute, says the spread of local money systems is a sign that people are starting to disbelieve in supposed homogeneity of Japanese society "They are looking more and more towards their local communities for refuge from the protracted pressure of deflation. Even if you lose your job with a company, you can still make yourself useful in your own local community."

Ms, Hama says the adoption of regional currencies is a form of capital flight and a step towards a system of city states. "If they come to be increasingly widely used as methods of payment among the local citizenry, their circulation could actually lead to a net increase in regional spending power. It all boils down to a question of acceptability, popularity, familiarity and credibility."

As these high hurdles indication, there is a long way to go before local currencies can be widely accepted. Essentially, the love, the dan dan and the peanut are facing many of the same challenges as the euro - a deficit of understanding and a surplus of suspicion.

Five months after the launch of the love in Yamoto, some local shopkeepers are already calling for a rethink of the scheme. "Its just a bother. Hardly anybody has heard of love and, those that do don't trust it as a currency," says Takashi Uchida, whose hardware shop is one of only five retail outlets that have entered the system. "It needs time to work and a new name. I feel very peculiar asking customers to give me 'love.' "