During my review session for Economies of the Pacific Northwest (Economics 432), my professor Ed Whitelaw brought up the topic of the currency located on the Island of Yap. Having little knowledge of the island, we continued to discuss the currency used on the island. Immediately I knew this was something that could correlate with GET. However the differences between the foreign exchange market and the currency on the island of Yap differ astronomically.
Located amongst the Caroline Islands, Yap is a part of the Federation of Micronesia. With less than ten thousand people, the small island has a big way of dealing with their money. The Rai Stones (while not commonly used today) are huge slabs of limestone that were imported from Palau, located 450Km away, by the Yapese over the past hundreds of years. The round, donut shaped limestone varied in size, ranging from 1.4 inches to 12 feet in diameter. The value of the Rai Stones is valued by the size and history behind the stone itself.
While the US dollar is the standard currency in Yap today, Rai Stones are used for ceremonial events, ones that might bond families together or possibly agreeing to any contractual ties on the island. Furthermore, Rai Stones are no longer brought to Yap, creating a constant supply in the currency. Due to the size and nature of the Rai Stone, the citizens know which stones belong to different members of the community, and sometimes do not even bother moving them from their previous location after contractual agreements have been made.
It seems beyond strange why a society would consider shipping in such large pieces of rock to represent money, but perhaps the perceived importance of how the Rai Stones got to Yap and the agreements settled over them is what made the stone keep value.
What do you think of the Rai Stone? Do you believe that the United States, or any major country, have a similar valued commodity?
(Post by Evan Amano)
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