Competition year: 2004
About Rolf Schroeder
1. Regional Markets
R. Schröder: Mr. Flor, with regard to those readers who are not familiar
with the reports you presented so far, would you be so kind and briefly
describe how the regional markets actually work?
S. Flor: The best way to explain the operation of these institutions is by
providing an illustration. Take for example my own situation - I am working
for a local authority and most of the payment I receive for this job is in
regional currency. We call this "Locales". In a way, this is a privilege
since I do not have to pay any income tax on it. On the other hand, I can
spend this money only in the region where I live. In addition to this
geographical restriction there is also a time limit: Only the income I spend
until the end of the year is tax-exempted. Last year I had a surplus of a
few hundred regional currency units and had to pay tax on it. In addition,
there is a second benefit, which makes it attractive to arrange deals on the
regional level: these transactions are also being exempted from
value-added-tax, the local levy, which is charged here, is somewhat lower.
Rolf Schröder: So, if you want to buy a bottle of vine from Bordeaux you
cannot pay with this regional money?
S. Flor: Oh, you touch a very sensible point as far as I am concerned
myself. You know, I am living in Hannover, a region in Northern Germany,
which is not exactly what you would call traditional vine country. Some
people tried to substitute this kind of import, but it requires a lot of
local patriotism to enjoy the domestic beverage they produce. But seriously,
there are quite a few expenditures - the new telecom equipment or hiring an
E-car - that have to be covered with Euro currency. Travelling is, for
someone like me, who only has a small income in global money, a luxury.
Rolf Schröder: Why don't you use your local currency and change it in Euro,
Dollar, Yen or whatever you like?
S. Flor: This is not possible, my Hannover money is not convertible. I can
change it neither into traditional global currency, nor into any other local
or regional money. You have to be aware that we do not have banknotes and
coins any more. All money is book money. Sure, last year it would have been
nice to find somebody who was prepared to exchange Euro against the surplus
I had in regional currency. I could have escaped from the rainy November
days in Northern Germany and spent two or three weeks in Southern Italy. But
unfortunately or fortunately - as you like - there is a wall between these
two types of accounts, the regional and the global one.
Rolf Schröder: Well, I would like to know a bit more about this "wall" as
you call it. But first, tell me more about the local or regional markets.
What is typically being transacted here?
S. Flor: I am just coming back from my hairdresser - this kind of service is
a typical example for activities on the regional level. You can find a large
variety of skilled trades, plumbers and joiners for instance. Hardware