Feasta’s particular approach to sustainability economics is to focus attention on the inadequacies of underlying systems. The development of local economies suffers from two particular adverse systemic effects – the in-built transfer of wealth from those that need money to those that already have money via the servicing of debt; and the transfer of wealth from the locality to the centre as globalisation progressively centralises economies. Local currency developers need to develop strategies that mitigate these two effects or they will remain limited in size and influence.
Re-localisation is often cited as a primary objective of local currencies. The recently launched Bristol Pound state their key objectives as: to support local independent traders ( “keep our High Street diverse and distinct”), and to boost the local economy “spending Bristol Pounds stops money leaking from the area”. These are objectives shared by all local economies (and arguably by any sub-economy with an identifiable identity such as a developing country).
This local focus can clearly have a positive impact on the local ‘brand’. It can highlight the businesses that have real roots in the area by providing sustainable employment, and which are owned by local residents. It can help residents identify more with their locality and builds a more solid sense of place – what Common Ground call local distinctiveness.
More than this, though, a well designed currency can facilitate local substitution and accelerate the frequency of exchange in the locality.
Any in-built promotion of local businesses (say via an online directory) can surface opportunities for substitution – for sourcing goods and services locally that were previously sourced out-of-area. Simply spreading awareness of local suppliers is valuable. [The synergy with the Transition movement is clear here – as some producers graduate from self-consumed production to selling produce locally, they need a market.] The extent to which this substitution is actually achieved though is often not clear. Currency designers can focus attention on this area by seeking out and publicising examples of substitution.
Another aspiration of local exchange currencies is to increase the amount of local trade – what we might call Local Domestic Product (LDP) above the level at which it would stand if it relied solely on the national currency. This ‘additionality’ is extremely difficult to prove, but being able to quantify the LDP attributable to the new currency is a good starting point.
Note that identifying and quantifying both substitutions and LDP effects is facilitated by access to the audit trail available to electronic currencies, and made difficult by anonymous paper ‘cash’ transactions.
Finally, the leaching of currency from local economies is in no small measure due to the repayment of interest on debt to national/ international lenders. For the currency designer this points to an important line of action – sourcing availability of capital finance from locally based institutions such as credit unions.
The Feasta Currency Group welcome the rich and varied responses to the challenge of re-localisation. The FCG itself continues to develop the ideas behind the Liquidity Network (LQN), as originally envisioned by the late Richard Douthwaite.
The LQN approach is to focus on currency as a means of exchange. Unlike the Brixton and Bristol Pounds, LQN currency (generically ‘quids’) is not formally exchangeable with sterling (or euros). It ‘designs in’ the possibility of rewarding users for pro-currency behaviours and indeed penalising them for anti-currency behaviour such as hoarding. Currency is spent or grant-aided into circulation rather than being exchanged for the national currency. A strong electronic currency element is preferred, to facilitate the generation of scheme metrics, as described above. For more information about LQN please email [email protected].
Feasta Currency Group