Shrink the World: Print Local Money

money If we've learned anything from the current economic crisis, it's that modern finance is complicated. Even the banks don't seem to understand the monsters they have created. It's a little ironic, because money itself is actually a very simple thing.

At its most basic level, money is just an agreed token of exchange. It has no value of its own, but functions wherever there is an agreement to honour a certain token. Currency is the one we usually think of, but there are others. If you take a faulty item back to a store, you may be given a credit note. This is a form of money, a mechanism of exchange within certain parameters - in this case, equivalent goods from that particular store. Stamps or air miles are similar kinds of money.

Because every form of money has to work within agreed parameters, it can fulfill a useful function in limiting or expanding trade. Air miles work by limitation, because they will only be honoured by one airline, and this guarantees that you will choose them in the future. The Euro works the opposite way. By expanding a currency across a whole continent, goods and labour can move between European countries much more easily, which stimulates trade.

International money will mean international trading activity. Economists generally believe this is a good thing, but when you can take a weekend trip to Dubai's annual shopping festival, but can't find a shoe store within walking distance, something's gone wrong. When it's cheaper to buy apples from New Zealand even when they're in season in the UK, international trade is no longer serving us well.

Globalization has a tendency to centralize and internationalize economic activity in ways that can be very damaging at the local level. We see it when independent shops and markets close, when factories shut down and move east, or when local farmers face bankruptcy. Without local alternatives, we have no choice but to buy the imported sweatshop clothes of the multinational brands, or the industrial-farmed processed foods of the big corporations. That in turn means higher pesticide and fertilizer use, and more emissions from shipping.

But, if international currency means international trade, then local currency can mean local trade, and this is where money gets interesting for the environmentalist. Alternative currencies give us a tool for counteracting the negative aspects of globalization. It does this by keeping money within the local area, preventing it from leaking away into the international system.

Andrew Simms gives an example of this leakage in Tescopoly, his book about the UK supermarket chain Tesco. Marsh Farm is a deprived estate just a few minutes from where I live in Luton. A few years ago some research was done on the estate to discover why it was still poor, even after so much money had been spent on regeneration.

The research found that nine out of ten residents got their groceries from the supermarket, and there were five Tesco outlets within a three mile radius. Every penny spent there left the Marsh Farm area, and went into the giant international coffers at Tesco HQ. That money could have gone to local producers or traders, if there had been any.

"A community supermarket, fast food delivery service and café-restaurant would ensure wages and profits made remain within the estate", the report concluded. The New Economics Foundation, who conducted the research, explain all this on

pounds Marsh Farm was unfortunate in not having any local traders to start with, but where there are, an alternative currency can support them. Two towns in England have launched their own currencies in the last year for this very reason. Totnes and Lewes are both Transition Towns, and have printed their own money as part of their re-localizing efforts. One ‘Totnes pound' is worth a normal pound sterling, except that it can only be spent in Totnes, in businesses that are owned locally. There are over seventy shops or market stalls participating, so there's no shortage of choice.

"The currency distinguishes the local businesses that accept the currency from those that do not, building stronger relationships and a greater affinity between the business community and the locals" says one resident. "The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal responsibility for the health and well-being of their community by laying the foundation of a thriving local economy."

Each Totnes pound spent in a local pub instead of in McDonalds, or at an artisan cheese-maker instead of at Tesco, is one pound less for agribusiness and multinational corporations, and this can only be good for the environment.

Alternative currency movements are at work around the world. The Money Network Alliance, based in Germany, is pooling global expertise on the subject. Berkshire, Massachusetts has its successful ‘Berkshares' programme. The Swiss WIR barter scheme has been running since 1934 and is now used by 20% of all Switzerland's businesses. (pdf)

Alternative currencies are also counter-cyclical, which means they do better when the mainstream economy falters. They can stimulate growth at the local level, are more stable than internationally traded currencies, and bring money back to earth. There really hasn't ever been a better time to print your own money.

Related Reading:
A Better Way to Make Money
Introducing Transition Towns

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Mark Herpel (anonymous)

The Berkshares seems to be the most successful operation in the US where notes are present. The idea of having local banks which can swap back and fourth from CC to USD anytime, makes that program a winner in my book. Merchants must love the ability to stay liquid while accepting local currency.
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Written in February 2009

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  • Posted on Feb. 16, 2009. Listed in:

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