Demurrage currency

Demurrage currency,^[a] also known as shrinking or depreciating money,^[2]: 7 is a type of money that is designed to gradually lose purchasing power at a flat constant rate.^[b] 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.^[3][2]: 16 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.^{[2]: 16–17}

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'. Gesell theorized that Freigeld would lead to fewer recessions by increasing the velocity of money, eliminating inflation, and creating an interest-free economy.^[3]

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