Friday, 15 November 2013

Love the local loot

Local currencies, such as the Bristol Pound, are increasingly widespread and successful. You can pay your local council tax in Bristol Pounds, buy goods and services from over 600 local businesses that accept them, pay using paper pounds or via text or online and pay your bus fare to First Bus if travelling within Bristol because they are an associate of the scheme. Elected Mayor of Bristol George Ferguson takes his mayoral salary in Bristol Pounds. 

Local currencies may also be referred to as community, complementary, regional, alternative, auxiliary currencies or private currencies. They have a different purpose to conventional currencies, though the terms can mean different things to different people.

The Schumacher Society state the advantages of local currencies, saying '...local currencies are a legal, but underutilized tool for citizens to support local economies. Local currencies function…the same way that national currencies have functioned on a national scale - building the…economy by creating a protective “membrane” that is defined by the currency itself. Local businesses that accept the currency are distinguished from chain stores that do not, building greater affinity between citizens…and their local merchants. Individuals choosing to use the currency make a conscious commitment to buy locally first, taking personal responsibility for the health and wellbeing of their community, laying the foundation of a truly vibrant, thriving local economy.' (more here) 
Local currencies like the Bristol Pound are community or auxiliary currencies in that they are used by people with the common bond of being located and using money in a defined community. Local currencies can also involve the common bond of association.

Local currencies like the Bristol Pound are complementary currencies because they are a supplement to conventional, national currencies such as the pound sterling. The legal tender is the pound sterling and the Bristol Pound, equal in value to the pound sterling, is a voluntary agreement to use the local currency as a medium of exchange for the purpose of supporting local economic activity.
The Bristol Pound is not strictly an alternative currency as it is designed to be a complement not a replacement for the conventional currency, the pound sterling. It is a local currency because it is for use in the Bristol locality as opposed to a larger but sub-national area (which would then make it a regional currency).

Using the term private currency emphasizes that the Bristol Pound is not issued under state authority ie of the government (see here). The Bristol Pound is a partnership between the Bristol Pound Community Interest Company and Bristol Credit Union and is a not-for-profit social enterprise (more from here).

Local currencies are tools of financial localism and may be considered a part of the fight against global capitalism that affords voluntary, market structures, helping communities trade within a defined area such as a neighbourhood, town or city.  Local currencies help to raise awareness of the state of the local economy and encompass a wide range of physical and financial form. They are associated with the economic (or new economics) discourse around sustainability often driven by community-based initiatives and social movements such as Transition, which seeks re-localisation to tackle problems such as peak oil, climate change, clone towns and big-box developments (more here and here).
As the Schumacher quote said local currencies work in part by establishing a ‘protective membrane’. The currency can’t be used outside the membrane and is part of trying to create conditions inside that are favourable. One might argue that it’s not desirable to have internal variations in currency and trade: but what is an optimum currency area? Given the crisis that continues to ensue from creating fewer currencies within the EU, where 17 out of the 28 member states abandoned their national currencies for the Euro and a single interest rate (see here), doing the opposite and creating more currencies seems good sense.

Local currencies tend to circulate and re-circulate rapidly, more so than national currencies. A fixed amount of currency is thus used more, producing greater overall economic activity and benefit per unit. Local currencies like the Bristol Pound are only useable in the local area, thus encouraging the buying of locally-produced and locally-available goods and services. More benefit accrues locally per unit of economic activity. The local currency can’t flow out of the local area to benefit other parts of the nation or other countries around the globe.
Local currencies have their critics, such as people wanting free trade across large areas as opposed to a sort of local mercantilism and monetarism. There is a debate on the degree to which local currencies can and do help a broad population, especially those less wealthy. The extent to which local currency initiatives, such as the Bristol Pound, can and do help the fight to reduce carbon emissions is also an issue. Nevertheless there has been a big leap in local currency use in the last twenty years and more than 2,500 different ones now exist globally (see UK examples: Totnes Pound, Brixton Pound, Stroud Pound and Lewes Pound).

Popping to the local shop for milk, bread or tea will not be an option for many if the local economy is not supported. By supporting local shops we can help slow down and stop  decline and boost the local economy as well as help in the fight against climate change. Small shops are currently struggling to survive due to the power of the big supermarkets, with thousands of UK independent shops going out of business each year. Supermarket power has become huge. The four biggest already control over three quarters of the UK grocery market; Tesco take 30 per cent and is still moving into neighbourhoods all over the country (image below shows local Bristol pub that's now a Tesco). Big supermarkets continue to try to get across their environmental credentials, but shopping locally is still a better option, especially if you leave the car at home and buy locally-sourced food.

The range of benefits from local shops is excellent: greater likelihood of providing local food; they often offer a much more personal service; they keep money circulating in the local area supporting other local businesses; along with street markets they offer affordability without roping you in - via special offers and some slashed prices - to more expensive purchases (a Friends of the Earth survey in 2003 found that apples were cheaper in greengrocers than supermarkets and in 2005 a study for the New Economics Foundation found that street markets in London were "substantially cheaper" than supermarkets for fruit and vegetables); they are more energy efficient than huge superstores as a study by Sheffield Hallam University showed that it would take more than 60 greengrocers to match the carbon dioxide emissions from just one average superstore; and a broad range of local shops provides more choice than one big supermarket. More from here.

Sustainable economics is of course much bigger than just local currencies. It aims for an economy based on: efficiency; renewability; respecting environmental limits; building stronger local communities; meeting needs now and in the future; local and global fairness; health, wellbeing and quality of life. It looks to provide consistent funding for voluntary, community and social enterprises and to redesign the banking system with more emphasis on local communities and re-circulating money throughout the local economy. The intention is to: overcome problems with access to capital; see reinvestment of profits locally; support community activities and voluntary organizations; have local community banks administer a community development fund; provide investment funds for local enterprises engaged in ecologically sustainable businesses; make loans available to small business and community enterprises using innovative as well as traditional forms of security; have community ownership, including democratically elected, accountable shareholder directors; provide full retail and small-to-medium business banking services. Sustainable economics advocates social dividends and shifting taxation from income to natural resources in addition to supporting the development of local currency, local exchange and trading systems (such as Bristol LETS) and time banking schemes.

More on the Bristol Pound:

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