Could the reintroduction of local currency make us think more deeply about the value of money?
In May, a Bristol credit union will issue its own bank notes, backed with, and convertible to, pounds sterling. The idea is to encourage more local trading: the currency will only be accepted by local shops that sign up to the scheme.
“One of the ways we can protect independent traders and businesses is to keep the money that is created in Bristol within the city,” said Ciaran Mundy, director of Bristol Pound CIC.
There is a long history of places having their own currencies and it was very common in this country until the centralisation of the banking industry in the 19th century. More recently many places around the world, including in the UK, have launched local currencies using a variety of models. For example, Stroud, in Gloucestershire, introduced a traditional barter scheme in the 1980s and Totnes, in Devon, introduced a local currency in 2006.
The Bristol Pound is bringing the idea of local currency up to date: it will use a fast and easy electronic payment system in partnership with Bristol Credit Union, thus offering the security of an authorised banking institution. In Bristol, those who join the scheme will also be able to pay their local council tax this way as the idea is supported by the Liberal-Democrat-led council
While Bristol may get a promotional benefit from this initiative, there are real benefits for businesses that participate too. Forming a closed user group such as this is a frequently used way of reducing competition in much the same way as networking. If you are the only lawyer in a network you are more likely to get the work than lawyers outside the network, and so on. So, if you are just one of a few sources of a particular service or product in the Bristol group, you are more likely to get work from people who have decided to spend Bristol Pounds.
The big difference, of course, between currencies today and those of yore, local or otherwise, is that rather than being backed by commodities or gold, most of the world’s currencies now are what is known as “fiat money”. It’s nothing to do with the Italian cars of the same name, but means that the currencies are without intrinsic value as a physical commodity and derive their value by being declared by a government to be legal tender.
In today’s world it is much more difficult to equate the intrinsic value of products and services and we have undergone a degree of value distortion as a consequence. This may be good for some but it can be bad for society if it gets out of hand. Many people now believe that one FTSE director should not equal 100 nurses.
The Bristol pound may just hit the streets at a time when localism is more popular. The intrinsic value of some products and services is being seriously questioned for the first time in a while too. Will it also remind us that we once used to barter and encourage us to reconsider the relative value of what we buy today?