Community Currencies - is it time for a Sheffield Pound?

presenter: Dr Jonathan Warner

Jonathan gave an informative and well-received talk about community currencies - both their past history and current applications. He illustrated it through his personal involvement with setting up the "Squamish dollar" in British Columbia.

The slides can be downloaded here

141124 Should we have a Sheffield Pound.ppt (warning 16.5Mb, lots of illustrations!)

141124 The Squamish Dollar.ppt

Discussion

There wasn't a separate discussion, as the speaker engaged the audience in discussion throughout his presentation. I have captured some of the discussion below (apologies for anything I've missed)

Overview

Many things can be used as currencies including bank notes, private currencies, business incentives (like Air Miles, Green Shield stamps), military scrip etc. Most, but not all, are denominated in national currency and, in general, backed by 100% reserves.

• the creator of the "Liberty Dollar" has been convicted of counterfeiting, and is due to be sentenced in December.   http://en.wikipedia.org/wiki/Bernard_von_NotHaus

Currency has social implications, as well as just a means of exchange. It is valued for how it looks and feels, and can become collectable

• What is "social capital"? It's the glue that holds a community together; can't put a monetary value on it

It's not the same as LETS (Local Exchange Trading Schemes) which are members-only and do not have a physical form. They tend to have more limited usage.

• Can a local currency be selective, eg. could we stop Tesco from using it? Big corporations probably wouldn't be interested in accepting a community currency anyway, so it favours smaller businesses. It also makes people more aware of their spending choices.

Numerous historical examples were illustrated and discussed (see the Powerpoint presentation)

• Is there a risk of counterfeit notes? Not really, simple precautions need to be taken to prevent photo-copies (eg. gold stripe, serial numbers), but beyond that any competent counterfeiter would be more interested in counterfeiting national currency.

Squamish dollar

Dr Warner had been involved in a scheme to set up a local currency in Squamish BC. He described in detail the objectives and obstacles (see presentation, above). In the end, the scheme failed to take off due to difficulty in securing seed capital.

Local currencies in the UK

The biggest (by value) is the Bristol pound (>£250,000 in circulation). The biggest by penetration are probably Brixton and Totnes

Bristol are thinking of allowing local taxes to be paid in Bristol pounds.

• How big an effect do they really have? Not really known (difficult to measure) though there are numerous studies under way.
• At best, they only form a very small part of an economy; the Totnes pound accounts for 0.01% of the local economy by value (higher by number of transactions as local currency purchases tend to be of low value). Even at low levels they can still have intangible benefits
• The Swiss WIR is used in 16% of transactions (of those that participate)
• It was suggested that if 2.5% of the people use it for 2.5% of their transactions, it would start to have a measurable effect.

"Rusting" (also called demurrage, Gesellian money)

Various schemes can be used to gradually reduce the value of currency, this is intended to increase the velocity of circulation and prevent hoarding

• stamp schemes can be used (a form of taxation) but can cause problems eg. stamps falling off!
• even without "rusting", inflation has a similar effect and was favoured by Keynes
• if money loses value too quickly, then the currency would lose credibility. Conflict between "means of exchange" and "store of value"

Leakage

This is where the number of redeemable notes in circulation falls, eg. due to being lost, becoming souvenirs, or it can be engineered by giving notes an expiry date. Similarly to rusting, it allows the issuer to make a 'profit' (seigniorage) which, in practice, is often sufficient to repay the cost of launching the currency. Any excess over costs can be redistributed to the community.

• Does this mean that the currency is less than 100% backed? Yes, though not where notes have expired. In Canada, community currencies are legally 'gift cards' and expiry is illegal; in the UK they are 'vouchers' and can expire.

Non-convertible currencies

Some currencies are not denominated in the national currency, and so cannot be changed back. eg Robert Owen and others "labour hours".

• there is some resistance to treating everybody's labour hour as equivalent!
• if the value floats against the national currency, then it can cause difficulties in calculating VAT

Some examples of currencies introduced to fight poverty and unemployment : Bangla-pesa , Hawarden scrip , seed stock (started by Michael Linton, who devised the LETS idea).

The future

Several of the community currencies are moving into mobile payment methods

Is it time for a Sheffield pound?

The question was not answered - but it's not something to undertake lightly. Many of the successful community currencies have been launched by the Transition network, and it would seem that Transition Sheffield would be most likely group to take this forward. Unfortunately, there was no-one present from Transition Sheffield, but the content of the talk would be a useful resource for them.

For those wishing to explore further, Dr Warner suggests International Journal of Community Currency Research