Published on July 6th, 2011 | by Beth Buczynski5
Local Currency: A Legal Alternative To Cash
The mere mention of printing money brings to mind words like “counterfeit,” “illegal,” and “prison,” but dozens of communities around the world are doing just that. And instead of a government crackdown, it’s bringing stability to the local economy.
Supporting local business is smart because it helps retain money in the local economy, unlike chains and franchises that send a large percentage of their profits out of state, or sometimes, out of the country.
When you shop at a store that’s owned by a community member, a majority of the profit gets reinvested in the local economy via taxes, payroll to local employees, and purchases.
Since the Great Depression, towns across America have taken this a step further by printing their own local currencies, also known as complementary currencies: money that can ONLY be spent at participating businesses within the geographical limits of a certain community.
Sound illegal? It’s not.
As Michael Marotta writes, “money usually has three attributes. It is a medium of indirect barter. It is a store of value. It is a unit of account. However, money does not need to be all three at once.” Marotta was instrumental in helping his Michigan town create the “Bay Bucks” pictured on the left.
“One of the interesting attributes of local currencies created since 1920 is that generally, they are not intended to be stores of value,” Marotta writes. “During the Great Depression 300 towns and other entities created a wide array of emergency money, “stamp scrip,” and other media. Back then, one of the expected problems was “hoarding.” The goal of these issues was to encourage spending, to keep money in circulation. Lakewood, Ohio, created scrip that announced on its face and back that it declines in value over time, the dollar of January 1933 being worth 50 cents in June. Other towns relied on other expedients to achieve the same result.
Piedmont, North Carolina, is another town that’s seen significant economic benefit from the use of a locally printed tender. The local currency, called PLENTY, draws attention to, and provides real support for, the local economy and the unique goods and services it provides. But, notes the program’s website, the most important benefits aren’t economic, they’re communal:
“Members seek each other out, meet face-to-face, and get to know their neighbors. The PLENTY allows the “small town values” of neighborliness, generosity, and self-reliance to blend with our community’s traditional support for diversity, social justice, and responsible development.”
Of course, a local currency will only work if people use it, and that means getting individuals, businesses, and the local government on board. In order to do that, you must have a plan and be prepared to answer the most frequently asked questions about legality, taxes, and most importantly security.
With many small businesses struggling to survive in this sluggish economy, many have found that the idea of a local currency strikes a chord with those looking to keep as much money in the community as possible. The draw for consumers is that they’ll be able to get “more” for “less” money. I’ll let Susan Witt, founder of BerkShares in the Berkshires region of western Massachusetts explain:
Under the BerkShares system, a buyer goes to one of 12 banks and pays $95 for $100 worth of BerkShares, which can be spent in 370 local businesses. Since its start in 2006, the system, the largest of its kind in the country, has circulated $2.3 million worth of BerkShares. In Detroit, three business owners are printing $4,500 worth of Detroit Cheers, which they are handing out to customers to spend in one of 12 shops.
Because local currency is honored and protected by the government, most local banks will honor it as legal tender for an agreed upon rate. Remember that Piedmont money I mentioned earlier? Local banks will exchange $9 for $10 worth of Plenty.
If you’re not sure that your town will buy into the idea of printing local currency right away, it’s important to remember that the printing is a completely unnecessary step. Just last year Fox News reported on a Pennsylvania community that helps support residents in need by using a time bank of hours-based currency.
Like many others around the country, Community Exchange is a program in which residents voluntarily exchange their skills and services for someone else’s skills and services. If you need help, you simply contact Community Exchange. As a member, you can use the interactive database to find someone who can help you or someone to whom you can offer help. You build up credit in the time bank, which can then be used to obtain a good or service that you need.
Would you participate in a local currency program if it were available in your community? Have you ever donated your services to a time bank? Tell us about it!
Image Credit: Flickr – lauren manning