Demurrage currency

Demurrage currency, also known as depreciating money or stamp scrip in its paper money form, is a type of money that is designed to gradually lose purchasing power at a constant rate. Demurrage money is often confused with inflation, as they both cause money to lose value, but they have significantly different economic effects. Unlike normal money, demurrage is designed to be only a temporary store of value. Demurrage money functions primarily as a medium of exchange and a unit of account. Proponents of demurrage currency generally believe that the medium of exchange and store of value functions of traditional money are antagonistic against each other.

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. John Maynard Keynes wrote "the idea behind stamped money is sound", but he also criticized it.

Demurrage money was used in ancient Egypt and in Europe during the High Middle Ages. It has been credited for the economic prosperity of those times. Shortly after Gesell's death, demurrage currencies peaked in popularity during the Great Depression as a series of emergency currencies, intended to reinvigorate the circular flow of income throughout the economy, due to their faster circulation velocities. Despite their success, most demurrage currencies were banned by central banks for violating national monopolies on currency. As of 2026, there are only a handful of local demurrage currencies that are still used, with the Chiemgauer being the most notable and widely used of them all.