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Bristol Pound

by ChrisCook 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."

Corporate challenge
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

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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.

I was involved in a LETS scheme in Bath, and the main benefits were social. People were more likely to 'trade' by making contact with each other and offering skill and/or time swaps.

The fact that money isn't being accumulated is irrelevant. What really matters is the extent to which the credit union offers 'loans' which can then be converted into physical activity and the creation of goods and services.

That certainly will boost the local economy - although it may not necessarily boost national GDP.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Feb 6th, 2012 at 05:09:22 PM EST
Indeed.

I'm on the board of LETSLink (which has been trying over many years to keep the LETS flag flying) and have always been very interested in how different types of currency operate.

There's a big difference between the different motivations (for profit/commercial; not for profit/social; charitable) for these 'Peer to Peer' or people-based 'credit clearing' systems which enable goods and services to circulate, and productive assets to be created.

'Peer to Asset' investment in productive assets - which is currently conducted via the owner of the asset - is another thing entirely.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Feb 6th, 2012 at 05:48:13 PM EST
[ Parent ]
"A lot of people work for the national companies, and you may actually cause an increase in unemployment.

You may indeed...

... but not in Bristol.

The point here is not to increase circulation velocity - that is a happy side effect. The primary point is to erect a protectionist measure around the city, because the city is the highest functioning political unit in the country that is prepared to conduct economic policy, since the central government has so blatantly abdicated its responsibility for macroeconomic planning.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 6th, 2012 at 05:32:02 PM EST
Will we see a return to the city state, de facto if not de iure?

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker
by Migeru (migeru at eurotrib dot com) on Mon Feb 6th, 2012 at 05:34:50 PM EST
[ Parent ]
Well, when Wörgl did it, they got shut down. So probably not.

- Jake

Austerity can only be implemented in the shadow of a concentration camp.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Feb 6th, 2012 at 05:43:48 PM EST
[ Parent ]
Well what Wörgl were doing was <gasp> printing money without troubling to back it with Central Bank money as Bristol and all the Transition currencies are doing.

That's why Wörgl got shut down, and that is why the Bristol Pound people would be shat upon from a great height if they tried the same.

.....but there's more than one way to skin a cat ;-)


"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Feb 6th, 2012 at 05:54:22 PM EST
[ Parent ]
Well what Wörgl were doing was <gasp> printing money without troubling to back it with Central Bank money as Bristol and all the Transition currencies are doing.

Wrong. Wörgl deposited an amount of Austrian Schillings in a local branch of Raiffeisen bank, and issued paper certificates redeemable at the local bank at 98% of face value.

The money circulated so fast that only about 1/3 of the originally intended certificated had to be issued. So the Wörgl money was backed three-fold by Austrian Central Bank money.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Mon Feb 6th, 2012 at 05:58:27 PM EST
[ Parent ]
Here's Tom Greco on the subject of the Worgl experiment.

32,000 schillings were printed (in denominations of 5 and 10 sch.), but only 12,000 schillings were issued by the parish by paying its workers.

The local currency was redeemable, on demand, for official currency, but there was a 2% fee on such redemptions.

For each schilling of local currency issued, one schilling of official currency was deposited (at interest) in a bank account to cover demands for redemption.

The depreciation (demurrage) rate was 1% per month. This was called the "Relief tax."

In order for a note to maintain its full face value, it was necessary to affix a stamp at the end of each month. these stamps could be purchased at the parish office.

The notes expired at the end of the year, but could be exchange, free of charge, for new ones, so long as all the necessary stamps had been affixed.

I stand corrected, having always thought that the Wörgl currency had not been backed by Schilling reserves.

But according to Greco it's by no means clear how much of the success was due to the Gesellian demurrage and how much was due to the fiscal multiplier of the public spending by the Wörgl parish.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Feb 6th, 2012 at 06:34:51 PM EST
[ Parent ]
There's a lot of interesting information in that note, actually, particularly in relation to the Wörgl tax backlog.

"The future is already here -- it's just not very evenly distributed" William Gibson
by ChrisCook (cojockathotmaildotcom) on Mon Feb 6th, 2012 at 06:43:37 PM EST
[ Parent ]
Interesting stuff. Interesting to watch what will happen...I suppose there will be even more ideas in the future how to fight big business that is actually draining local economies and moving money offshore. How the hell they find those numbers/statistics in the end to show us that big business is all that keeps national economy afloat, is above me. Numbers are such an obscene...

Science without religion is lame, religion without science is blind...Albert Einstein
by vbo on Tue Feb 7th, 2012 at 02:19:38 AM EST
Just a bizarre thought, Chris, but does the odd legal status of the "City of London" allow for different schemes inside the boundaries of the City?

There aren't a huge number of normal people living in the boundaries of the City, but it is a non-zero number and quite a few local businesses...

by Metatone (metatone [a|t] gmail (dot) com) on Tue Feb 7th, 2012 at 05:58:58 AM EST
That is a very interesting question.

The City Corporation is a strange beast, and has always been - often literally - a law unto itself.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Feb 7th, 2012 at 09:10:51 AM EST
[ Parent ]
How do you do your income tax calculations if you are a local business and do a lot of transactions in local money? Is there a fixed exchange rate, or do you have to record that on a daily basis in your records? Sounds like an accounting nightmare...
by asdf on Tue Feb 7th, 2012 at 12:06:33 PM EST
This local money is pegged 1:1 to the country's currency.

In fact, the circulating local money is backed by an equivalent amount of official currency held in escrow.

tens of millions of people stand to see their lives ruined because the bureaucrats at the ECB don't understand introductory economics -- Dean Baker

by Migeru (migeru at eurotrib dot com) on Tue Feb 7th, 2012 at 12:07:57 PM EST
[ Parent ]


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