New Currencies for a New Economy

When financial crises and recessions hit, regional and local economies suffer devastating ripple effects. As activists look to shield their local economies from some of the harsh impacts of globalization, they’ve come across one potential solution to tackle the heart of the problem: create community currencies and change the money itself.

In the wake of the 2008 financial crisis a group of friends on the Italian island of Sardinia set up Sardex, an electronic business-to-business mutual credit system. Six years later, around 140 million euros worth of transactions have been made. Similar models exist across Europe, like Utrechtse Euro in the Netherlands and SoNantes in France.

In addition to these trade networks, local currency schemes have been emerging around the world as technological innovations offer new ways to circumvent the usual issues of scale and sustainability. As community currency schemes become easier and cheaper to manage, sophisticated experiments keep growing. But none of them quite match the scale and traction of the Bristol Pound.

The Bristol Pound is the UK’s first city-wide community currency and the “largest and most institutionalized in Europe” according to researcher Coco Kanters, who has been studying community currencies since 2013. Available in both paper and electronic form, one Bristol Pound is equal to one pound sterling, and can be spent freely in any of the city’s participating independent shops.

Five years after its launch, 5 million Bristol Pounds have been spent and 80,000 digital transactions have been made. The Bristol Pound has just over 2000 users, including around 800 businesses. And since 2016, Bristolians can pay their local taxes, energy bills and transportation fares using the local currency.

The Bristol Pound was launched in 2012 by local Green Party politician Stephen Clarke and three other Bristolians worried that the proliferation of chain stores in their city would threaten the community life and small independent character of their hometown. The unique identity of Bristol – which street artist Banksy calls home – has played a key role in the success of the currency.

Kanters says Bristolians tend to have “a greater appreciation for local businesses as opposed to multinationals.” The city is home to the longest and last traditional high street – or Main Street — in the UK and Bristolians are determined to protect that local spirit. For Clarke, Bristol is a Goldilocks-style fit for a local currency. “It’s not too big, it’s not too small,” Clarke says. “It’s the right number of people, the right kind of political support, the right activist vibe.”

That vibe was clearly illustrated in the 2011 Tesco riots. Thousands of Bristolians organized and campaigned for weeks when Tesco — the UK’s biggest supermarket chain – announced it was opening a store in Stokes Croft, a neighborhood known for its strong counter-cultural scene. The opposition campaign escalated as city residents sought to protect the independent character of their hometown.

Faceless chain stores, giant supermarket retailers and global fashion outlets have been pushing out mom and pop shops across the UK and around the world. In addition to eroding neighborhood character, multinational corporations are also sucking profits away from local communities. But local currencies, like the Bristol Pound, are making inroads at keeping the money in the place where it gets spent.

“Typically in the UK if you spend a pound at a multinational, about 80 pence of it immediately leave the city and about 20 pence stays. If you spend a local currency, the two are reversed,” says Clarke. The economic principle behind this argument is what’s known as the “local multiplier effect”. Money spent in locally-owned businesses generates greater local economic benefits as businesses are more likely to re-spend that money in their community.

Though the Bristol Pound has seen great success in recent years, its capacity to tackle rising inequalities and social exclusion hasn’t yet bet proven. Kanters notes that the typical Bristol Pound member remains “a white, middle-class, Green-voting individual,” usually based in the most affluent parts of town.

According to Susan Johnson and Helen Harvey-Wilson, two researchers from the University of Bath who conducted a thorough evaluation of the Bristol Pound, one reason for this is that it’s much harder for people living in hardship to adopt local currencies. There’s a certain degree of financial flexibility and psychological energy required to be able to manage multiple accounts effectively. And there are many people living in hardship in Bristol.

In his 2016 State of the City address, Bristol Mayor Marvin Rees warned that “while Bristol is getting wealthier, inequality is increasing and the city becoming ever more unaffordable.” While Bristol is a city of thriving local business, it’s also “fractured by race and class,” Rees said. Some neighborhoods are among the most deprived in England, with life expectancies nearly a decade under the national average.

These same areas are also deprived of the local independent stores the Bristol Pound is meant to sustain. Chain stores and giant supermarkets are often the only option in these neighborhoods, which poses a challenge for Clarke and his colleagues seeking to expand their local currency.

To get around this issue, the Bristol Pound team has launched “Real Economy,” a cooperative aimed at supplying fresh local food at an affordable price to poor and low-income communities. The coop has also opened multiple neighborhood centers throughout the city, where people can prepare and share a free meal with fresh ingredients.

Initiatives like Real Economy are crucial to the sustainability of the Bristol Pound. Historically, these alternative forms of exchange have experienced surge of popularity in times of economic crisis when money is scarce. But they have also tended to fizzle out as quickly as they emerged, failing to achieve the critical mass required for widespread adoption. So for Clarke, defining success for the Bristol Pound means taking pride in its longevity.

“The biggest thing we’ve done is survive,” Clarke says. “We’re a tiny project, and people think we are much bigger than we are, but we’re still here. We launched in 2012, it’s 2018, and we’re still going strong and expanding, so in a way that’s the biggest achievement.”