Three options for creating a local currency

As we’ve replied in our frequently asked questions, a county-wide local currency in a county as large as Gwynedd would be extremely difficult to manage.

But local currencies certainly work well in geographically smaller communities – so there’s no reason why businesses in Porthmadog couldn’t create the Port Pound, or why businesses in Caernarfon couldn’t introduce a Cofi Coin!

Here are three different types of local currency that individual communities in Gwynedd could introduce to help strengthen their local economies.

Cash currencies

Using a local cash currency, the issuing authority would print up ‘banknotes’ in denominations of their choice – for example, £1 notes, £5 notes, £10 notes and so on. Shoppers can exchange their Sterling currency for local currency notes at designated exchange points.

Several UK communities are already doing this; for example, there are Lewes Pounds, Brixton Pounds, Bristol Pounds, Stroud Pounds and Totnes Pounds.

Local currencies can only be spent in the local area, which means that money stays circulating in the local economy – helping to keep local people in work, among many other benefits.

Some issuers of local currencies provide incentives for shoppers to use the local currency instead of Sterling. For example, they might offer an attractive exchange rate which makes the local currency worth a little more than Sterling. Shoppers might pay 90p Sterling for one local pound, meaning they save 10% in any shop that accepts the local currency.

Businesses that agree to accept the local currency would of course lose out a little in the exchange process. But most of them, given the choice, would prefer to make a sale at 10% discount than to not make a sale at all – and in doing so, they are able to continue employing their staff, or buying their supplies from other local businesses, so the money stays in the economy and benefits everybody.

Electronic currencies

Of course, people don’t always shop in cash. In this day and age, it’s likely that we’ll shop using debit or credit cards, or some other electronic method (such as PayPal or text message) – so how can local currencies keep up with the times and entice customers who prefer to pay without using cash?

In Brixton, local council employees can opt to have part of their wages paid in Brixton Pounds instead of Sterling. They can then pay their Council Tax in Brixton Pounds, and can make payments to local traders using text messages, meaning they don’t have to carry cash – whether Sterling or local currency – at all. Here’s a short video of this in action:

Time as currency

Time can also be a tradeable commodity. In some communities, people use a ‘LETS’, which stands for ‘local exchange trading system’. Using their LETS, members of the community have a virtual ‘bank’ into which they can pay in and take out hours.

Let’s say that Iwan is a plumber. He provides ten hours of plumbing services for free to Llinos, the local hairdresser. In effect, Iwan has made a ‘deposit’ of ten hours, and is entitled to ‘withdraw’ ten hours from another member of the local LETS. Llinos, on the other hand, has ‘withdrawn’ ten hours, and therefore must provide ten hours’ worth of hairdressing services to another member of the LETS in order to redress the balance.

This is just one example of how a LETS might work. Other members could include copywriters, lawyers, website designers, gardeners or chefs – anybody who is prepared to provide a service in exchange for receiving an equal number of hours’ service from another LETS member.

Could a local currency work for your community?

If you’re a business owner and part of a local networking group or business support group, it’s worth talking to your fellow members to see if a local currency could work for your community.

If you’d like some help in looking at different local currency ideas and evaluating which would work best for your community, or if you’ve already decided which system you’d like to use but need some help in setting it up, please contact us and we’ll tell you what sort of support we’re able to offer.

Recommended reading

The above are just three examples of local currencies; there are others to explore before you make your decision. The following links are to articles on other websites that explain more about buying locally as a concept, and how local currencies work. Please note that Gwynedd Council is not responsible for the content of external websites.

 

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