Demurrage currency

Demurrage currency, also known as depreciating money: 7  or stamp scrip in its paper money form, is a type of money that is designed to gradually lose purchasing power at a flat constant rate. Demurrage money is often confused with inflation, even though they have distinctly different economic effects.: 15–16  Unlike traditional money, demurrage is designed to only be a temporary store of value. Demurrage money functions primarily as a medium of exchange and unit of account.: 16 

Proponents of demurrage currency generally believe that the medium of exchange and store of value functions of traditional money are antagonistic against each other. In some cases, demurrage currencies have been employed as emergency currencies, intended to keep the circular flow of income running throughout the economy during recessions and times of war, due to their faster circulation velocities.: 16–17 : 8  Demurrage currencies peaked in popularity during the Great Depression, before most of them were banned by central banks for violating national monopolies on currency.: 8  There are only a handful of local demurrage currencies that are still used, as of 2025.

Demurrage is sometimes cited as economically advantageous, usually in the context of complementary currency systems. The German-Argentine economist, Silvio Gesell, advocated for demurrage currency as part of the Freiwirtschaft economic system. He referred to demurrage as Freigeld 'free money' — "free" because it would be freed from hoarding and interest. Gesell theorized that Freigeld would increase the velocity of money, eliminate inflation, reduce unemployment, create an interest-free economy, and lead to fewer recessions.: 2 

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