Bali's Dual Currency System


Nowadays there is nothing unusual about resolutions to save money – the financial resources of states, but also of many medium-sized and small businesses are in short supply. For a long time it has not been possible to satisfy all the needs of a society by means of official currencies. Complementary monetary systems – i.e. currencies that supplement a national one – can resolve this problem. How positive the coexistence of a national with a complementary currency can be is shown by the example of Bali.



Today, decisions to make budget cuts are quite common; the financial resources of nations as well as those of many small and medium-sized companies are stretched to the limit. The needs of society can no longer be met exclusively by means of a single national currency in each country. Complementary money systems – that is, currencies functioning in parallel with the national currency – can help alleviate this problem.


We can see how fruitful the co-existence of national and complementary currencies can be in the example of Bali.


Bali is one of the many islands that make up Indonesia.


For more than 1000 years the Balinese people have been organizing their public life in a particular way – namely through a network of social, economic, and cultural organizations encompassing the entire social life of the community. The Balinese call the most important of these institutions the banjar, which means “neighborhood” or “community”. In the banjar, two entirely different currencies play a central role: the national currency, the rupiah, and a local “time currency.” This system of two types of currencies being used in parallel is called a dual currency system.


The MoneyMuseum’s intent is to show how these two currencies work, and what implications they have for the social relationships among their users. Discovering this can stimulate and encourage us westerners to rethink our own monetary systems; so we might find new ways of financing and implementing social tasks, such as the care for the sick and the elderly, child care, and the realization of cultural projects.


This report is based on the research done by Bernard Lietaer and Stephen DeMeulenaere, who have studied the banjar and its dual currency system on-site.


Bernard Lietaer was at that time professor at Naropa University in Boulder, Colorado, USA, and is an expert on currency systems as well as the author of numerous books and articles. The Future of Money and The Mystery of Money are his best-known works.


Stephen DeMeulenaere was project manager at the Strohalm Foundation and was its representative in Asia. The Strohalm Foundation is a Dutch foundation which works to achieve socially just and ecologically sustainable economic conditions worldwide.


Bali is Indonesia’s most popular tourist destination. Every year, 4 million tourists visit the island paradise with its 3.3 million inhabitants. Normally, a traditional way of life disintegrates under the onslaught of this kind of mass tourism, with fatal consequences for the local culture. While some people become poorer with the loss of traditional ways of life and work, others who do business with the tourists become richer and richer. Consequently, social bonds are weakened.


In Bali, however, this has not been the case.


The mainly Hindu population still practices their religion and traditional culture in daily life. They have merged old and new ways into their own unique way of life, parts of which include daily offerings to the gods, various rituals and a large number of ceremonies. People from all parts of the population take part in them, no matter which social class they belong to. The Balinese still dance and play their traditional instruments not only for the tourists, but mainly for themselves and their gods.


Bali is able to maintain this cultural diversity mainly because of its dual currency system. The two currencies support an extremely stable form of society. It is a society in which masculine and feminine values are equally balanced. Here, however, “masculine” and “feminine” are not to be understood in the manner in which we usually understand them. Normally, we associate these terms with the male or female gender. In some Asian cultures they can have a far more comprehensive meaning.


This vision is based on the philosophy of Taoism. In ancient China, Taoism was the most important philosophical system along with Confucianism, and it had a profound influence on people’s daily lives. Its influence can still be felt today, not only in traditional China, but also in other parts of Asia – such as in Bali.


In Taoism, all powers are seen as existing in complementary pairs. Such pairs are: earth – sky; water – fire; inhaling – exhaling; pulling – pushing; etc. These contradictory terms are categorized according to their qualities as yin, the passive-feminine principle, or as yang, the active-masculine principle. Taoists see these powers, although they are clearly polar opposites, as being complementary components of a single unity. The need for achieving a harmonious balance of these powers is the core of the Taoist world view, since both opposites need each other. Like a magnet or a battery, both of them need a positive and a negative pole. Neither of them can exist without the other. In Western culture we are not so used to this way of thinking. Hence, we do not really possess adequate linguistic terms for yin and yang.  


What would be the difference, then, if we lived in a world in which this feminine principle was as highly regarded as was the masculine?


Imagine a world in which the long-term interests of humankind and of our planet were in balance with the short-term interests of the world of business and industry, where there was room for both conscious cooperation and healthy competition, and where child-care and care for the elderly were as widely respected and as well-paid as was investment banking. Imagine a world in which there was meaningful work for everyone and at the same time plenty of time for family, community, and personal affairs. Such a world would allow for conserving as well as for consuming, would satisfy not only our material needs but also our mental and psychological needs, and would respect life in all its diversity. In short, it would be a world in balance.


Here, Bali is an example to us…


For centuries, Bali has been using two different kinds of currencies. The first of these is the rupiah, Indonesia’s national currency, which is issued and managed by the national bank as in all other countries. The Balinese have no more influence over it than the average Americans have on their Chairman of the Federal Reserve.


The second currency is nayahan banjar, which means “work for the common good”. This currency’s unit is three hours work. This work is performed either in the morning, or in the afternoon, or in the evening. The signal for this kind of work is the kukul, a special wooden gong.


In contrast to the national currency, the Balinese have direct control over this time currency, since every family is a member of the banjar, Bali’s most important civil administration unit, and sends a representative to the meetings that are held on a regular basis. The banjars’ leaders are elected by a decision of the majority of the members and can be dismissed the same way. Each member has the same rights and a single vote. There is no special status granted to wealthier or otherwise more influential members. Once a month on average, the members meet in the bale banjar, the meeting place, in order to discuss things openly and to make decisions. At these meetings, the members suggest new activities or give an account of running projects. At the same time, they decide on contributions of time and money for each project. Together they organize feasts, repair temples, and even build schools and roads, when necessary. This way, each banjar manages its own currency by deciding on the time budgets of its projects.


Now, why is this dual currency system so important for maintaining community spirit and cultural values?


In order to answer that, we need to revisit the Taoist worldview with its balance between yin and yang.


The ways of thinking and acting of whole cultures can be categorized according to their features into yin, the passive-feminine principle; or yang, the active-masculine principle.


When we categorize the features of national currencies, which work more or less the same way all over the world, we can see that a national currency has exclusively yang characteristics. Its most prominent features are hierarchical authority, concentration and competition.


In contrast to that, time currency corresponds to yin. It is created on a democratic basis by the users themselves, and therefore encourages flow and cooperation. Its most prominent features are mutual trust and community.


Looking at characteristic ways of thinking and acting within a culture, we also notice that our western culture is dominated by yang.


Competition, rational action, incentives for concentration as well as the desire to act and to have are all part of it.


In contrast, in a culture characterized by yin features such as cooperation, intuition, perseverance and simply being become central.


These characteristics of yang and yin are understood in the Taoist sense as twin terms showing how yin and yang complement each other. They form a whole in which the two polar opposites need to be in balance.

Competition is balanced by cooperation; rational action is balanced by intuitive action. Concentration on business and technology is balanced by perseverance in social and ecological tasks. The desire to act and to have is balanced by being.


Now, what does all this have to do with money?


Money will buy anything, except genuine human relationships: With money we can buy food, clothes but also a new camcorder, the latest music, or a fast car. Money will even buy status and power. Therefore it has enormous power to motivate, no matter which cultural context we are in. Normally we are aware of this.


However, we are hardly aware of the fact that the type of money used in a society has a profound influence on values and relationships, because it either encourages or suppresses specific collective emotions and behavior patterns.


Our western economic system, for example, is dominated by competition, technology and excellence – all yang features. It is no coincidence that although cooperation, social competence and sustainability all exist as slogans, they nevertheless only play a subordinate role in daily life. For our purely yang money system encourages highly specialized sciences, global trade, centralized administration structures – and an increasingly unbalanced distribution of financial resources within society.


Because of the total lack of a yin currency the social, interpersonal issues are increasingly being neglected: less and less money is available for the care of old and sick people, for the support of children and young people, and for art or cultural projects. And people generally have to fight hard against further cuts or complete cancellations of budgets in these areas.


Bali’s dual monetary system, in which both – a yin and a yang currency – currency are used, doesn’t have this weakness.


This kind of dual currency system creates more flexibility than a system with only one currency, like the one we know.


People with a great deal of money usually have little time, whereas people with little money usually have more time. Bali’s dual monetary system takes advantage of that fact. In poorer communities the banjar naturally chooses projects with a bigger time budget and fewer rupiah; whereas wealthier communities vote for less time and more rupiah in their projects. In both cases local resources can be mobilized in order to put into practice what the community decides is important. And in both cases there is always a combination of rupiah money and time money involved. The differences are only in the proportions. According to various banjar leaders time is even more important that the rupiah for supporting the banjar: people get to know each other well by working together, and people meet people whom they would never get acquainted with in a single-currency, rupiah economy. People who contribute to the community only in the form of rupiah become rather unpopular in the long run. Thus there is an exchange between the social classes instead of an ever growing chasm between rich and poor. And this is also the reason why religious and cultural celebrations are prepared with so much loving care and artistic quality - and are celebrated in extraordinarily ornate ways.


Every society needs a yang economic circle as well as a yin economic circle. The monopoly of yang currency leads to the things we experience today: important yin functions like raising and educating children or caring for the elderly become “unaffordable.” Staff is reduced and services are no longer provided at their previous levels. Natural resources end up being destroyed as well.


The reason is that wherever there is a monopolistic yang currency, yin functions are less recognized and valued. There will be less solidarity and less creative group activity than in societies with a dual yin-yang currency system.


The disintegration of society is a result of the monopoly of yang currency.


On the other hand, when yin and yang currencies are being used simultaneously, as on Bali, then two complementary economic circles emerge. One maintains the momentum in the commercial realm, while the other enables the social realm to continue to function, with each of these exchange systems supporting and complementing the other.


A dual currency system is no magic wand that can prevent third world poverty and cultural decline or violence. Bali is no paradise flowing with milk and honey, as it is sometimes portrayed in the travel brochures. On Bali, too, there are conflicts. Crime happens and environmental pollution is increasing. But the frequency and gravity of such breakdowns are on a level that can be much more easily dealt with than in many other places on this earth.


We live in a time of fundamental change. Things which used to seem secure have become uncertain, or are even disappearing. Money is changing, too. During globalization some large yang currency blocs have been formed, in the west as well as in the east. At the same time, new horizons continue to open up. Worldwide, thousands of local yin currencies are now emerging. This development has only just begun.


We can learn from Bali how two different types of money can function side by side, and how they can shape a community. On Bali, time is money – but in an entirely different sense and with different consequences from those which we know.

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