Tuesday 9 June 2015

The innovators: the Bristol pound is giving sterling a run for its money

The success of the community currency – with the equivalent of £700,000 in circulation – has put the spotlight on attempts to keep money in local economies

When his firm was going up against national companies for contracts to manage waste, Jon Free needed an edge to win the pitches. The answer he found was in the sense of community that existed among small businesses like his.
By using his local currency, the Bristol pound, he saw companies were more willing to give their business to him and keep money flowing in the area. Launched almost three years ago, the community currency aims to keep money circulating among independent retailers and firms by encouraging people to use the local ‘cash’ instead of sterling, an idea that has inspired other towns and cities to take up similar schemes in the UK and abroad.
“To be able to drop in and create a link to make [the money] a circular thing is a big part of it,” the managing director of Waste Source said. “To say that we are registered with the Bristol pound shows that we are more community based.”
In use since 2012, the system operates as both notes and in electronic form with each Bristol pound equal to one pound sterling. Some 800 businesses in theBristol area now use the community currency, with coffees, meals, council tax and even pole-dancing lessons paid for with it.
“The practical vision was to get something which would connect local communities with their businesses in a way which kept money building up in their local communities,” the currency’s co-founder, Ciaran Mundy, said. “What happens is that if you spend it at a large supermarket chain, 80% of that will exit the economy very quickly.”
The East Bristol Bakery accepts the Bristol pound.
 The East Bristol Bakery accepts the Bristol pound
While community currencies have a history going back to Victorian times, there has been a resurgence in recent years, with Bristol emerging as the standard-bearer in the UK.
The system works by people exchanging their sterling for paper Bristol pounds – in single, five, 10 and 20 denominations – or by opening an account at the Bristol Credit Union. The currency can then be spent in participating businesses, or between businesses, in return for goods or services.
So far, some £1m has been issued in the community currency, according to Mundy, of which about £700,000 is still in circulation. As it is a voluntary scheme, the currency can switch between sterling and Bristol pounds, he said.
The thinking behind the creation of the new currency, said Mundy, was to make a minor change to allow for more money to be spent in local areas.
“I was looking for a technological and cultural innovation which allows people to conduct themselves in a way which is more sustainable. A big part of that is being aware of the impact of your economic activity,” he said.
The paper notes are non-redeemable vouchers that expire and can only be spent with traders who will take them, but can’t be swapped for cash at a bank. The digital currency is regulated like sterling and is treated in a similar way in accounts.
“If you know, when you spend money – whatever form it is in – the impact that it is going to have because you know the people that you are spending it with, and you know the people that they are going to be spending it with, you are aware of the circumstances of the economy that surrounds you; it is a more transparent economy.”
The results of the community-oriented approach to money exchange is particularly evident in the city’s restaurant sector where local growers who sell to local restaurants use the Bristol pound, said Mundy. The mayor of the city, George Ferguson, takes all of his salary in Bristol pounds.
Which businesses can use it are dictated by a few broad rules. First, the business has to be in the area. Second, they cannot be listed on the stock exchange.
“The criteria is: if you are mostly locally owned by people who live in the area. We have a postcode map drawn around the boundaries of where you can join the Bristol Credit Union – that area is about one million people,” said Mundy. One large supermarket chain and other high street retailers, as well as a budget airline, have asked to be included in the Bristol pound scheme but were turned down, he added.
The success in Bristol has led to similar schemes in other parts of the country, with 25 communities working on likeminded projects, including one in Liverpool. The ambition in Bristol, says Mundy, was to alter the financial system very slightly so that it works in favour of local business: “Over the course of time you end up with some kind of fair and ecologically minded economy … and a more localised economy,” he said.
The Exeter pound is expected to launch at the beginning of September. Ian Martin, one of the organisers, said they hope to have 100 retailers using it at launch, initially using paper and then, later, digital transactions.
“This sterling-backed model is very simple. It is simple because it appears on notes and it appears digitally,” he said. “Younger people tend to work digitally and older people tend to work with the notes but you need both to make it real. The advantage of the notes is that each piece is a local flyer, it makes it feel real to people but also it popularises it.”
The amount of money circulating in Bristol is still at a low level, although a local architects firm have recently billed the council for 900,000 Bristol pounds. Similar large-scale deals of the currency would see it blossom, said Mundy. “If we can get that type of procurement going, then we will have a very serious impact on the local economy and that is when we will see structural economic changes,” he said.
Jon Free’s company cannot spend the currency with any of its suppliers so instead found another outlet for it: “We booked our Christmas do in December with a restaurant that accepted that and paid them in full for the evening, and that cleared a fair amount,” he said.

Barcelona takes on the idea

A coalition of leftwing parties in Barcelona has taken inspiration from the Bristol model to propose a similar currency in the Spanish city. Also intended to benefit small and medium-sized companies, the organisers want to pay some salaries and benefits with the community currency and allow local taxes to be paid with it.
Link: http://www.theguardian.com/business/2015/jun/07/the-innovators-the-bristol-pound-is-giving-sterling-a-run-for-its-money#comment-53465534

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