In most case studies, consistency in resolving social issues was noted: growth of employment opportunities, empowerment of poor people etc. Several shortcomings are worth noting. In view of this, participation of local authorities is advisable. Distinctive feature of systems from this category is their social orientation.
It arises from the focus of their operation, which can be generalized as providing help to the local community. Analysis of the case studies suggests that they are successful in realizing it by alleviating poverty, ensuring the social engagement, empowering population and in some cases favouring gender balance. In economic terms, these systems provide wider employment opportunities, increase welfare of the clients, and may be flexible to external changes e.
Triodos Bank. It can also be argued that they provide more optimal allocation of financial resources or goods from the social perspective, since all operations are fulfilled with the participation of groups from the local community. This category represented the biggest sample with 20 case studies having been classified into it.
Social effects included resolution of problems with housing for homeless people, reviving connections in labour markets, and fostering community building. The analysis suggests that support from the state is needed for a successful operation of the systems. It was found that non-profit complementary systems may lack membership, which adversely affects the range of goods and services provided, and represents an impediment for success of such systems.
For an updated and detailed effort at classification, see: Classyfying Complementary Currencies. So-called local currency systems, like the one that contributed to the pesticide ban in Calgary's parks , rely on a homegrown form of paper money that is accepted only in a small geographical area and is not backed by the national government. The intention of local currency, explains Gerald Wheatley, a founder of the Calgary Dollars project, is to promote a sense of community and to stimulate the local economy by ensuring that cash stays in the region.
O ne of the greatest benefits of the program, he says, is that it provides "one more resource, one more social networking support for progressive projects. Time-based currency, in contrast, is designed to strengthen communities by valuing "the universal characteristics of human beings," based on the understanding that every individual has something to offer, according to Edgar Cahn, founder and CEO of Timebanks USA. Under this system, every member 's time is valued equally, allowing for what is effectively a more structured form of barter.
When a person performs an hour of service for a neighbor, he or she earns an hour of service from anyone else in the system. In this way, the elderly Madison woman was able to spend an hour cooking for one member of the local time bank and was repaid with an hour-long crochet lesson from a local year-old boy. Alternatively, the Chicago school children were required to give hours each of tutoring services to earn a refurbished computer.
Alternative currencies are the future: why it matters for development
These types of programs convert community members who are conventionally recipients of support into active participants in tackling local problems. See the related entries on Time-based Currencies and Local Currencies. Either one or both together could also be used as a community currency.
A community currency could operate in the same way as an F-Cash mutual credit system or bank line of credit. By weighting recent contributions to social capital more than those in the distant past, we recognize that debit and credit limits naturally dissipate when someone drifts away and stops participating in the community. Eventually, both excess credit and excess debt might need to be written off.
Such a community accounting or currency system can be used as an educational, analytical, and practical tool for building community self-reliance. It is possible to use C-Cash to account for locally-added value within the community without actually creating a separate community currency.
This could be done by matching every C-Cash ledger transaction with a corresponding F-Cash mutual credit system transaction of equal value. In fact, if the mutual credit system were used strictly for locally-added value transactions, it would make a separate C-Cash ledger unnecessary. This goes to show that C-Cash and likewise T-Cash could easily be implemented using existing banking systems, and that its use does not necessarily imply the creation of a separate community currency.
Analogously to matching C-Cash ledger and mutual credit accounts, we might think of C-Cash as envelopes containing Federal Reserve Notes paper money , sealed and signed with the promise to keep the envelopes within the community. The envelopes would be merely labels to mark those Federal Reserve Notes which are being used to account for locally-added value within the community. The analogy breaks down, however, when we need to account for C-Cash debits negative amounts of C-Cash.
For this reason, it is more convenient to use a ledger than physical envelopes. In addition, a ledger makes it easier to keep C-Cash circulating strictly within the community. Besides, if the envelopes really contained Federal Reserve notes, someone would have to keep paying bank interest on them, just as we are accustomed to paying for the privilege of using F-Cash. By agreeing to put nothing of value inside the envelopes, we would be using the envelopes themselves as a form of currency.
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It may be preferable for community-building purposes that we use T-Cash measured as time hours whenever possible, rather than C-Cash measured as money dollars. Time cannot be inflated arbitrarily, so this would prevent inflation of T-Cash. As social capital is created, through time shared in mutual benefit, at the lesser rate that the two parties value their time, perhaps a living wage is a reasonable guide to this value.
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If so, it might be reasonable to accept T-Cash in payment only for the personally value-added portion of a transaction, and C-Cash in payment only for any additional locally value-added. Used in this way, T-Cash and C-Cash might encourage the socially-sustainable employment of labor and ecologically-sustainable use of local resources for production. The first revolutionary or reformist use of this idea, as a check against galloping usury and high interest rates, was the foundation of "Banks of Piety" by the Dominican order of the Catholic Church in the late middle ages.
The Dominicans, having discovered that preaching against usury did not deter the usurer, founded their own banks and provided loans without interest; this "ethical competition" as Josiah Warren later called it drove the commercial banks out of the areas where the Dominicans practiced it. Similar private currency, loaned at a low rate of interest but not at no interest , was provided by Scots banks until the British government, acting on behalf of the monopoly of the Bank of England, stopped this exercise of free enterprise.
The same idea was tried successfully in the American colonies before the Revolution, and again was suppressed by the British government, which some heretical historians regard as a more direct cause of the American Revolution than the taxes mentioned in most schoolbooks. During the nineteenth century many anarchists and individualists attempted to issue low-interest or no-interest private currencies. A general overview of such efforts at free enterprise, soon crushed by the Capitalist State, is given by James M.
Lawrence Labadie, of Suffern, N. The ideal local currency speeds up exchange within its target community, but deploys exchange limits to slow or eliminate leakage to larger ecosystems via transference. In all observed cases, they are an effective but short term solution. Complementary currencies can not exist in a vacuum, and as they grow and develop they eventually build links to the single, fragmented global economic system. This system, or market, prices the value of goods and services relative to each other, making the limitations of a rural economy relative to an urban economy for instance obvious over time.
How efficient such a system is remains subject to debate and offers arbitrage opportunity in areas of inefficiency. Remember - a perfectly efficient system would eliminate profit due to market pressure, and with the elimination of profit so goes incentive. The fundamental difference in these currencies and their inherent advantage lies in two other areas - issuance relative to use, and underlying corresponding value. As currency issuers dating back thousands of years have learned, issuance of currency is eventually fundamentally related to backing assets.
If you currency is based on backed assets that can ultimately be used for participant redemption, the currency remains strong relative to others. If it can't, it doesn't. Councillor Redmond says Glasgow has been closely watching existing alternative currencies like the Brixton Pound in London, which was introduced in So they printed a currency that would have the same value as the pound, but could only be traded in independent Brixton shops, where the shopkeeper would also have to spend it locally.
This year the Brixton Pound got its own cashpoint, from where people can withdraw local banknotes bearing colourful images of local heroes, like David Bowie and secret Agent Violette Szabo, to spend in over local shops. It can also be used by residents to pay council tax and by employers to pay wages. No two local currencies are exactly the same.
But the Brixton Pound and other recent schemes follow the example ten years ago of the Totnes Pound, a 'complementary currency': that is, one supplementing the national currency.
As fears for financial stability took hold during the recession, complementary currencies grew in popularity. The Bank of England does not consider these forms of currency legal tender, but the notes hold value in the same way as a gift-card from a department store, with the same kind of restrictions about where they can be spent. Proponents say complementary currencies boost spending in smaller geographical areas, which can have environmental benefits as businesses cut transport distances to deal with local suppliers.
Detractors say they have no real economic impact and work only as a game for the middle classes, who can afford to buy from independent shops rather than chains. Hull has its own local digital currency that can be earned from volunteering and used to pay council tax. Kingston, Birmingham and Liverpool have schemes underway. Glasgow could be next. But the working group has some serious questions to answer first, not least: do complementary currencies actually work? Scott Cato says the fish-in-water problem — the idea that sterling is so ubiquitous, it is never questioned — is the biggest challenge for complementary currencies.
She knows all about it as a founder of the Stroud Pound in , a currency that has since gone out of circulation. What they don't understand is that banks have the power to create money. We've given the power to create money to private corporations and people don't understand that we can have it back ," she says. In Stroud, suspicion of the local currency among local businesses became a barrier to success. Scott-Cato said traders refused to join the scheme because they were "running a business", as though putting the community first and placing the needs of others as equivalent to their own was in itself bad business practice, or as though they were somehow being disloyal to sterling.
Without enough currency in circulation, it ceases to work. Scott-Cato says Stroud's size meant meant the Stroud Pound was never viable: "We couldn't get the velocity of circulation right, which contrasts with the Bristol Pound. Clarke also says the small scale of local currencies means they are "always scrabbling around looking for money". One way founders of the Bristol Pound have addressed his is by setting up an umbrella organisation, the Guild of Independent Currencies, to share information between local currencies in the UK and help new organisations.
Technology might also have a solution. Peter Ferry, a commercial director, travels to Glasgow to tell those working on the Glasgow Pound that that his company Wallet has come up with a way to use the blockchain, the technology behind bitcoin, to make it easier for people to use multiple types of currency.
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We need to make it simple for them to do that and also to make it simple to earn these currencies in many ways," he says. Size doesn't always matter. Sometimes, the smallest places — like Totnes and the Ekopia community — are best able to support complementary currencies because the people who live there are engaged with their local economy in a meaningful way. It got through to people not just sat around coffee shops. I'm not sure a London Pound would work, because people identify with their local area in London rather than the city as a whole.
Bristol Pound users don't have high incomes necessarily, but surveys show they are engaged with their local community and they have a higher educational attainment than average. In the years since the financial crisis, as local authority budgets have shrunk, some areas have relied heavily on engaged communities to fill in gaps in public services.
By contrast, deprived areas where people cannot afford time and money to put into their community have become more deprived, making them even harder for local currencies to reach. When you go to disadvantaged areas with the Bristol Pound hat on you realise there aren't independent shops there, there's an Aldi and Lidl and that's it.
More than a third of children grow up in poverty in Glasgow. A Glasgow Pound might struggle to get poorer families to buy into a local currency that ties them to shopping at more expensive, independent shops, rather than getting deals at big supermarket chains. When Scott-Cato and her colleagues wrote about the experience of setting up the Stroud Pound, they said it was telling that complementary currencies have been accused of being a game for middle-class people, rather than a genuine economic solution.
Perhaps for that reason, experts like Duncan McCann have stopped thinking of complementary currencies as a one-size-fits-all solution. He said they can function as a kind of 'gateway drug' to introduce people to a new way of thinking about money. Ciaran Mundy, CEO of the Bristol Pound, says it is important to think of the systemic impact rather than looking for targeted treatment of symptoms of economic deprivation. Nothing is tying Glasgow to existing models for complementary currencies. But during the first meeting about setting up the Glasgow Pound, the workshop shows just how hard it would be to invent a new system that works for everyone.
Each table is handed a wad of Post-it notes and a piece of white paper. A table leader asks everyone to write on the Post-its what they want the Glasgow Pound to achieve. Elbowing teacups out the way, people get to work. They scrawl a dizzying number of proposals, from keeping more wealth in the local area to empowering people who feel cut out of the national economy, or to moving towards land reform and saving the environment.
Team leaders try to assemble these ideas in themes to report back to the room.