Over the past two years, a couple of socially–minded changemakers have been pondering the concept of a local pound, right here in Birmingham. Initially, the idea of an alternative pound is a foreign concept to the average person. Why would we need another pound, when our national pound, stamped with Lizzy, seems to work so well in our everyday transactions? Well, since the financial crisis of 2008, we are all slowly realising that the financial system in which we depend, does not work very well for the average household or business. Finance is lubricant of globalisation and the decisions made by its institutions have to be global in nature. But what is good for multinational banks and insurance companies, isn’t always the best thing for local people and organisations. It is the aim to use a local currency to lubricate the regional economy and ensure that decisions about its usage are local in nature.
Birmingham is not the first location to try out its own currency. There have been a number of schemes across the United Kingdom and further afield. These different initiatives have tried out different approaches. Some offer the local exchange of services with tokens or timebanks, usually managed through a community organisation. Where local currencies have been developed, Pound Sterling is exchangeable one-for-one for that local currency. The initial pound is kept safe and can be exchanged back at any time. With so many experiments having already taken place, the future Birmingham Pound can draw lessons from already successful schemes.
The largest and most widely known alternative currency is the Bristol Pound. Initially set up in 2012 it has grown to have a circulation of over £1million Bristol Pounds, with over 1000 user accounts and 800 local businesses accepting it for their goods and services. Local observers have highlighted the multiplier effect of accepting or using Bristol Pounds. A cafe can buy apples from a local farmer in Bristol Pound, or can in turn use a local architect for a barn renovation in Bristol Pound, who in turn can pay their local taxes in Bristol Pound. The Bristol Pound can only be accepted by local businesses and therefore the benefits of the currency are kept locally. People living in Bristol can now even buy their energy with Bristol Pound, through a local renewable energy company.
Other examples of local currencies in the UK include Brixton, Totnes and Stroud. Each of these have tried out different approaches, in different locations with different user groups. Brixton is a relatively new initiative, but is interesting because it one of the first to try out an electronic version. Users and shops could text each other the Brixton Pounds using their phones. This service is provided at a lower cost to mainstream credit cards and therefore keeps even more money in the local area. There are now 250 businesses that accept the Brixton Pound. The electronic element could provide a business case for Birmingham and other local pounds.
Finally, there is another form of alternative currency that is slowly being adopted in the UK and around the world: cryptocurrencies. The most famous of these is Bitcoin, which works by using mathematical equations to ensure only a certain number are in circulation. So although they are digital, they can’t be copied or multiplied. There are user maps of locations that take them, with certain cities leading the way with businesses accepting them. There was even a guy who travelled around the world for 18 months spending only Bitcoin. The underlying technology has the potential to disrupt or even democratise large sectors of the economy. There has been an effort to combine a cryptocurrency with a local currency in the form of Hullcoin.
The road ahead is long for the changemakers who want to bring an alternative currency to Birmingham, however as we have shown here, they are not alone on this journey. As the local currency develops it will draw inspiration from those that have gone before it, but also have the opportunity to have its own experiments, hoping resulting in more successes than failures.
Stuart is a member of the Birmingham Pound Steering Group and is about to start his PhD on the subject of alternative currencies, renewable energy and social justice. He is also a partner in a Birmingham web design company advising organisations on online solutions, including cryptocurrencies.