Tue Feb 7th, 2012 at 01:32:00 AM EST
Bristol Pound Currency to Boost independent traders
The Euro is in trouble, the world's financial system is in turmoil. Is this the perfect time for cities to go it alone, and print their own money?
A group of independent traders in Bristol are launching their own currency, with the backing of the council and a credit union.
The "Bristol Pound" will be printed in notes, and also traded electronically.
There are other local currencies in the UK, but this is the first which can be used to pay local business taxes.
Ciaran Mundy, the director of the Bristol Pound, explained the concept behind the currency.
"Big companies just hoover up money from a local area," he told me.
"Money goes into their financial system and typically out into London and into the offshore sector."
But by definition, Bristol pounds must stay in the city. Spend a tenner in a Bristol bakery, and they must use it to pay their suppliers or staff. In turn, those companies will have to use the money within the local economy.
"We'll be driving more business to independent traders, and ensuring the diversity of our city, which is one of the things people love about Bristol," Mr Mundy said.
This is pretty much the Transition Money - eg the Lewes Pound - approach which is thoroughly neutered so as not to be a threat to the system.
The outcome of this model - where local currency is issued against reserves of the 'real thing' (hollow laugh) - is that no new money is created, but existing money is effectively pinned to an area.
front-paged by afew
Interestingly, it is the prospect of success that worries some the most.
Ben Yearsley understands money. Big money. He is an investment strategist at Hargreaves Lansdown, the Bristol finance house which looks after £22bn of people's savings.
He points out that the scheme will do nothing to help Britain's economic recovery.
"This won't boost spending," he explained. "It will merely move money from one sector to another, from national firms to local ones."
And if the Bristol Pound really works, Mr Yearsley worries that big national firms may be put off.
"A lot of people work for the national companies, and you may actually cause an increase in unemployment. Worse, there may be a brake on investment in the city."
Now if money does stay local, at least profits do not get hoovered out to our friend's buddies in the City, which is something.
But on the face of it, the benefits are minimal and unlikely to begin to cover the costs of putting the scheme together, although a small amount of interest will accrue in respect of the reserves.
This income may be increased if the notes are pretty/collector's items etc - then they will never get cashed in at all, resulting eventually in a windfall.
That sort of tourist money such as Saltspring Dollars
is not a bad idea, but it's a completely different beast to the Bristol Pound, which is intended to be the 'real thing'.
Anyway, there are three elements to the Bristol Pound which means it probably has more chance of success than any earlier UK experiment
(a) Automation - ie it is not just bearer notes, but also has an accounting system;
(b) Professionalism - it is being run by a credit union;
(c) Municipal Involvement - Bristol Council will accept the currency in payment for business rates.
In fact, I have just learned that the Bristol Pound is the second prototype of a New Economics Foundation initiative with a Dutch software provider Qoin, and they are issuing invitations to Join the e-money revolution