Wednesday, September 26, 2012

Bristol's Own Currency

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I had blogged about the English city, Bristol which had expressed its intention to launch a direct assault on global trade by introducing its own currency, the Bristol Pound. Check out my earlier post at this link, published February 11, 2012.

On September 19, 2012, Bristolians did just that. They unveiled their local currency to great fanfare with the Lord Mayor handing over a £B1 note in symbolic exchange for a round loaf of granary bread made by local baker Joe Wheatcroft, who said he would put his first piece of Bristolian cash towards buying a dairy cow. (The notes were designed by local artists and coming in denominations of £B1, £B5, £B10 and £B20).

The monetary scheme is a not-for-profit project and it is designed to encourage residents to buy locally produced goods from the independent retailers which accept them rather than chains and megastores. With a steady queue of residents soon lining up to swap their pounds sterling for "Brizzle" quids – with an exchange rate of 1:1 – the early signs are good.

The idea is deceptively simple yet brilliant. If the locals spend more money with local traders, then that helps the local economy instead of money leaving the city. By spending the money with each other, they foster a healthier money supply in the city, which is particularly important in these times of economic recession.

Ciaran Mundy has been working on the scheme for three years now. To him, this is much more than just a local curiosity. The idea is to help local traders by issuing money which customers can only use in their shops. In turn, customers know that the shop must then buy its stock from a local supplier, or pay a 3% fee to convert the Bristol Pound back into sterling.

More than 350 firms in the city have signed up, making it the UK's largest alternative to sterling. Unlike previous schemes which have relied on paper, the Bristol Pound can be used online, even by mobile phone.

Technically, Bristol pounds are vouchers, not banknotes, but they are interchangeable with sterling.

There are other currency systems – such as Brixton in London and Totnes in Devon – but they are much smaller and do not use mobile phones for buying and selling.

Alternative currencies have certainly done well abroad. A German currency called the Chiemgauer has been operating in Bavaria since 2003. Last year, 550,000 Chiemgauer were in circulation, with a turnover of 6.2 million. With a 1:1 exchange rate with the Euro, that's serious business. In 2006 a rival to the US Dollar was launched in the Berkshire region of Massachusetts, called the BerkShare. Since then, 2.2 million have been issued and 370 local firms are signed up.

At the end of the day, the Bristol Pound is just a complementary currency that is intended to be used as well as sterling, rather than replace it, with businesses taking part in the scheme on a voluntary basis. So it depends on local support to ensure its local success.

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