Why one English town created its own currency
The Bristol Pound lets people support their local economy and 'spend money with their values,' its creators say.
Wed, Mar 20, 2013 at 07:29 PM
Video: Bristol Pound
“Well over 90 percent of all financial transactions are electronic these days. It would have been madness to start a new money based only on paper notes.” This, says Katie Finnegan-Clarke, was one of the key insights gleaned in the runup to the launch of the Bristol Pound — a local currency scheme in Bristol, England, that has been drawing headlines and attention from media and financial experts alike since its launch in fall 2012.
Convinced that the secret to reviving vibrant, human-scale economies lies in rethinking how our monetary systems work, a group of Bristolians including activist and entrepreneur Ciaran Mundy and community organizer Chris Sunderland undertook a feasibility study into launching a complementary currency dedicated to independent businesses in the Bristol area.
Paper money is old hat
Having studied the successes and shortcomings of existing local currency schemes across the country, it became apparent that while many paper-based local currency schemes enjoy an initial flurry of interest from enthusiastic consumers, the notes eventually drop out of circulation.
To truly succeed, concluded the group, the Bristol Pound would have to think big, and it would have to think high-tech.
Photo: Sami Grover
Open source text-to-pay software
Together with the Brixton Pound, an existing complementary currency scheme in South London, the group applied for a 100,000-pound grant (about $150,000 in U.S. currency) to develop an electronic text-to-pay interface. The resulting software, which has been made open source with a view to encouraging similar schemes worldwide, has become the cornerstone of the Bristol Pound’s launch. Text-to-pay, which is already widely used in Africa, is still a relatively foreign concept on British high streets — but with most British banks planning major text-to-pay initiatives in the coming year, Finnegan-Clarke expects consumers to become increasingly comfortable with the concept.
With a system of payment in place, the next step was to establish the infrastructure for account management. Here, the Bristol Pound sought the help of the local credit union, as Finnegan-Clarke explains: “James Berry of the Bristol Credit Union was an early supporter and is a key member of our board. By partnering with a local financial institution, we’ve been able to offer state-of-the-art account management, security, and the peace of mind that individuals and traders alike can always exchange their Bristol Pounds for regular money if needed. It was a risky move for the Credit Union, given that nothing on this scale has been attempted before, but the response has been incredible.”
Regulators take note
Inventing your own money, however, is not as simple as it might sound. As the local money activists prepared for the launch of the currency, they began attracting the attention of the powers that be, said Finnegan-Clarke. “About a week before the launch, we were summoned into an emergency meeting with the Bank of England and the Financial Services Authority. I’m not sure they’d realized how ambitious we were being with this project until then. They did have some concerns, of course. We’re not allowed to call our printed pounds 'notes,' and we have to print an expiry date on them. They are, essentially, a beefed up voucher scheme. But for the most part, the experts at the FSA and the Bank were very interested in and supportive of what we’re trying to achieve.”
Living off local currency
With all the regulatory ducks in a row, the Bristol Pound finally began circulating on Sept. 19, 2012, to great fanfare and media attention. In the first week Nick Hand, a local blogger and graphic designer, decided to ditch regular currency and successfully lived off the Bristol Pound for an entire week . The experience, he reported, encouraged him to seek out independent businesses and unique traders he might never have heard of otherwise. One of the biggest benefits for Hand, however, was the very real sense of ownership and connection to your money that the Bristol Pound offers: “Bristol is a proud city, I am a born and bred Bristolian (my parents and their parents were Bristolians), so it feels only natural to support its own currency. But I know that people move here and adopt the city and learn to love it equally. This currency is part of that, it stays in the city, it supports independent traders in the city. Every time I look at a note and see 'People of Bristol' written on it, I will think of that.”
Photo: Sami Grover
The question of who is using the Bristol Pound, and why, is an interesting one. According to Finnegan-Clarke, it’s not an easy question to answer, she said. “Nothing like this has ever been attempted before, so it’s hard to quantify what constitutes success. We know that 140,000 Bristol Pounds are already in circulation, far more than we initially expected, and we now have 500 traders accepting the currency. As for who is using them — this really seems to reach across a whole range of traditional demographics.”
Mayor accepts entire salary in Bristol Pounds
While initial circulation figures were already encouraging, the Bristol Pound received an unexpected and unsolicited boost when George Ferguson, the newly elected mayor, announced that he would take his entire salary of 63,000 pounds (US$95,000) in Bristol Pounds. As Finnegan-Clarke explains, Ferguson shouldn’t have any trouble finding a use for his money. “George Ferguson is a business man. Unlike with many local currency schemes, the Bristol Pound can be used to pay local business taxes. It’s this kind of indirect support and encouragement from the city that has made it possible for us to aim so high,” she said.
Exactly where the Bristol Pound will be in a few years' time remains to be seen, but Finnegan-Clarke has some pretty specific goals. The group is working on establishing a presence on every major high street in the city, and on recruiting a diverse range of businesses that will allow consumers to meet most of their needs using only local money.
Above all, however, the team behind the Bristol Pound wants to create a fundamental shift in how we think about our money. “I overheard one of our traders explaining the Bristol Pound to a skeptic the other day. She told him it was 'happy money.' People just seem excited to spend it. They know that it’s benefitting their local economy — and that benefit will eventually come back to them. That’s got to be a good thing,” Finnegan-Clarke said.
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