Community solutions must become common currency

I am writing this from Amsterdam where I am meeting representatives from local government and other think tanks to share ideas and practice about ‘community currencies’.

The question which interests us is how can we keep money circulating in our local economies while at the same time incentivising and rewarding positive social and environmental action?

One of the problems with our current monetary system is that it fails to channel money effectively.

A key function of the system, alongside providing a mechanism for exchange and for savings and investment, is that it provides a common unit for measuring the value of goods and services. However, due to the flawed way in which this currently takes place our monetary system does little to encourage pro-environmental behaviours and policies, or stimulate an active civil society.

But it has also failed on its own terms. Recent events have exposed the lack of resilience in the macro-economy, plus our monetary system has never been particularly effective at supporting local economic development. Fundamental reform is required.

Encouragingly, many councils and communities are not simply waiting for this wider set of reforms to take place. They are finding their own ways to ‘plug the leaks’ in their economies, for example by changing procurement practices and stimulating local supply chains, to help money re-circulate and ‘stick’ locally.

The most pioneering are also now also developing community currencies.

Often referred to as ‘complementary currencies’ or ‘alternative currencies’, these systems help boost local economic resilience and incentivise positive social and environmental outcomes in a way that national currency systems do not.

The Brixton Pound (B£) is one such example. Set up in 2009 with the aim of increasing spending within the local economy and strengthening supply chains between local businesses, Transition Town Brixton launched the new paper-based currency. The community currency takes the form of bank notes in conventional denominations but featuring Brixton inspired images, with B£1 equal to £1 sterling. Over 180 independent businesses in the area have signed up to accept the currency in their shops and services and as it is a community currency operating only in Brixton, residents and businesses in receipt of B£ are incentivised to re-spend locally (although can also exchange the currency back into sterling if they choose at selected locations).

There are other examples too. In the UK Lewes, Totnes and Stroud have all introduced their own community currency schemes while others, including Bristol, are in the process of doing so as I write.

Elsewhere, community currencies have been based on the accumulation and redemption of time credits, such as through local timebanking schemes. Others have been based on ‘reward points’ acquired by taking action which is socially or environmentally useful. For example, the NU-spaarpas scheme in Rotterdam incentivised residents to separate their waste and redeem their reward points in local businesses and services, leading to environmental and economic benefits.

The discussions we have been having here in Amsterdam reveal further expansion and innovation to come. This includes a new time backed scheme the council and community are taking forward in east Amsterdam, the commitment Lambeth Council has made to incentivise citizen engagement in public services and civic action as part of its recently launched Cooperative Council initiative (including an aspiration to the roll-out the B£ across the borough), and work underway by NGOs active in the field to match paper-based community currencies with a digital platform to enable electronic currency schemes.

With many local economies struggling to remain resilient, and councils up and down the country now looking to forge new reciprocal relationships with their citizens, community currencies are a useful tool for all of us working at the local level.