The simplest explanation of the term “Local Currency” might sound like an alternative to virtual currencies like Bitcoin or Dogecoin, and a double alternative to the fiat currencies like the Sterling Pound or Dollar. It is a deep underground of monetary policy no one aims to hide or to speculate on. Local currencies just exist, have a parallel flow to traditional examples and the supporters are logically limited to an area – district, city, island or any other geographically predetermined community. The most examples can be met on the British Isles as the official state pound is one of the oldest moneys of the world (in its common form of coins and bank notes) and sets an example for emission of reserved values.
Any type of money is destined to disappear as long as there are no two individuals willing to perform exchange. For example an organic grocery store deep in the wilds of South London accepts payments completed with pounds or transferred by a smartphone. To be precise the merchant is not willing to attract any kind of publicity or make a promotion as many vendors do with Bitcoin. He is just among some others seeing in a local currency a real competitor to the state supported money. The modest store is named the Brixton Wholefoods in the lead of Tony Benest, a 30-year old inhabitant of Brixton, who shares the details with pleasure. The local pound exists around the same five years as the invention of Satoshi Nakamoto, but does no bear the ambitions to replace all existing world currencies to provide equality and liberty. Benest explains:
“It’s an additional form of payment for people who don’t have a credit or debit card, or don’t want to get involved with the banks.”
The Brixton Pound exists in the two possible forms. Since 2009 it can be touched and carried in the wallet as the notes have been printed. The units are very colorful; carry images of famous people originating from the district (none other, for example, as David Bowie) and have all necessary protection features to prevent imitation (watermarks, holograms, ordinal numbers and other methods of security). Currently, numerous transactions are made with an SMS adding to the system an online component. The logo is derived from the Sterling Pound (B£), but the administrative activities are performed by Brixton Pound Community Interest Company. The digital aspect makes from the local currency a relative of the Bitcoin – distinct, but sometimes feeling an echo from global events.
Brett Scott, a Brixton resident and author of “The Heretic’s Guide to Global Finance” denies the link between the increasing popularity of Bitcoin and the local affection to the Brixton Pound. Even being not regulated by the authorities does not make them similar. The events in the life of the Brixton Pound do not necessarily mirror the shocks and praise relieved by the global phenomena. Considered as an alternative, both currencies have different advantages and attract users with various methods. According to Mr. Scott:
“In reality, Bitcoin tends to appeal to a very different crowd. Local currencies are all about building community ties, whereas Bitcoin [...] is focused on preserving personal autonomy and personal wealth.”
It means that Bitcoin gives its best to provide a link between people far away from each other, but local items try to form a sodality – format of relationships lost during the industrial revolution and further technical and scientific progress. Leander Bindewald, a researcher on complementary currencies at the New Economics Foundation, agrees that both items have less in common, as local units do not have the goal to create an additional income, do not serve as investment for extraordinary returns. This aspect clearly shows that local currencies make a bigger emphasis on exchange, everyday use in comparison with tradable Bitcoin. He claims:
“Bitcoin’s big user community has never merged with a local community. [Local currencies] are intrinsically different from Bitcoin.”
Although there are main differences between the currencies, the big brother Bitcoin might support the local examples in some ways. Mr. Bindewald explains it with an example – the Bitcoin succeeded to attract the attention of the policy makers. The composition and implementation of rules or laws will determine the lives of local currencies as well, allowing them to leave their unnatural underground. He also comments on Bitcoin:
“Policy makers are realizing that Bitcoin is asking questions they can’t answer. In this case, it’s great because Bitcoin is challenging the paradigm.”
Tom Shakhli, the engagement manager for the Brixton Pound, believes that positive movement around the widely known virtual currencies brings some additional points to local values. At present stage it is not a big problem that people hearing about local moneys associate them with digital currencies existing merely online. As long as it provides no harm, the additional publicity can only stimulate the development. Mr. Shakhli states:
“We all fall under the same umbrella, which is alternatives to national currencies. We are all part of that family, I guess. Each one gives the other more credibility.”
He is not even afraid to draw fantastic long-term forecasts. He foresees:
“I imagine in five years’ time, there’ll be some really popular digital currencies, and maybe 50 more local currencies in the UK. I think that’s a safe prediction.”
The prosperous picture of the future drawn gets covered with dust as Mr. Bindewald advices the local currencies to deny too close relationships with Bitcoin. The successful party might turn to be a stone bind to the neck – all negative attitudes, decisions and regulations will impact them and maybe flush away. The lack of education of officials might prevent the blossom of the Brixton Pound and other forms of money. He says:
“There might be negative effects, if the regulation of bitcoin goes in such a way that all alternative currencies are thrown into the same bucket and then dismissed by the regulator.”
In case, dear reader, You are not acquainted with the peculiarities of English economy and finance, do not be surprised to hear that the Brixton Pound is not the only local currency in the UK. The town of Totnes in south Devon having around 7000 citizens was first to introduce a new alternative unit of exchange. However, the largest area using a local currency is the city Bristol. Even the council tax can be paid in the local money and the major receives his salary with it too.
Leander Bindewald approves that local currencies currently are under spotlight globally. Personally, he works on a project called TradeQoin. The basic principles of the initiative are very simple – a network unites small businesses from all over Europe and they are free to support each other with a credit on advantageous terms (in comparison with traditional credit institutions). The description is similar to a currency:
“There is no central authority issuing credit. This gives businesses more liquidity, cheaper credit and makes them less likely to fail.”
To succeed in global transformation of the existing system and principles, the alterations have to be made bottom up – from retailers like Tony Benest. Even knowing he follows the news on Bitcoin, it is not making him a devoted supporter of the coin:
“Bitcoin probably isn’t quite as convenient for a bit of local shopping. I’ve never even seen one outside of a television set [...] The Brixton Pound is a local gimmick. I don’t think it makes much difference.”
He also underlines the differences between global alternative currencies and the Brixton Pound:
“The people in Brixton Village are very keen on the Brixton Pound. It’s a bit like a comment I read in an article about Brixton Village: ‘Saving the economy by people selling coffee to each other”.”
This expresses the main goal of local currencies – to support small local businesses that are losing customers due to extraordinary power of chain stores. They do not tend to replace the Sterling Pound, but play a complimentary part to the main currency of the country. They are valued together at party, in case it is differently determined by the owner of the café, shop or stand. The merchant is allowed to make special offers for the holders of the Brixton Pound. It is not a secret that money spent locally, not at a supermarket network spread all over the country circulates longer inside the community, up to three times. The statistics also prove the interest – 170 have signed for the electronic version, but 250 accept the paper form. The transaction fee is only 1,5% (smaller than by other electronic payment methods), no subscription payment or costs exist for the installation of the corresponding POS terminal. Lambeth Council agrees to accept business rates in the local currency. Employees of the local council can obtain their wages in the Brixton Pound. The authority even plans to establish its own currency – the Lambeth Pound. Shakhli values the decision of the authority very high:
“The council has been very supportive from the beginning. There is a correlation between a successful Brixton Pound and a successful Brixton in general, so they think it’s been good for the area and want to support it.”
Are there many of us that can be proud of their local self-government showing such financial farsightedness to protect local businesses? Feel free to tell us more about Your local experience and share Your position on the matter.
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