The Bristol Pound: What is the point?
From 12 noon today hundreds of Bristol’s independent retailers will begin accepting the city’s own local currency as payment, as the Bristol Pound goes live.
From Goldbrick House to Blackboy Hill Cycles, more than 300 of Bristol’s independent traders will welcome the Bristol Pound alongside sterling.
But as the final countdown to the launch begins, some are asking, ‘what is the point?’ Here we explain what local currencies are all about, and what the Bristol Pound could do for the city.
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Local currency is, in short, a payment mechanism that can be used for purchases from local businesses. It is essentially money that is used across a particular locality or region.
The Bank of England explains local currencies are independent, local initiatives, and are not linked to the Bank of England or to Bank of England notes.
Therefore local currencies are not legal tender, as the only banknotes to have legal tender status in England and Wales are those issued by the Bank of England.
Nevertheless, local currencies may be accepted as a means of payment by the mutual agreement of the parties to the transaction. In the case of the Bristol Pound, the 300-plus independent businesses participating in the scheme will accept them.
Local currencies are not intended to replace sterling, but operate alongside it.
Meanwhile Time Magazine explains: “Issuing an alternative currency is perfectly legal, as long as it is treated as taxable income and consists of paper bills rather than coins.”
Scores of local or ‘community’ currencies have sprung up across the US in recent years, and local currencies that have been around for years have seen a spike in interest.
Writing in January, CNN Money explains: “While there were only about 20 active community currencies in the United States in 2009, there has been a recent resurgence, with at least a dozen communities developing their own currencies in the past couple of years”.
Stimulate the local economy: By using currency that is accepted only within a certain geographical area, you ensure you’re supporting local businesses. In this sense, local currencies promote and incentivize local economic activity.
In the case of the Bristol Pound, the shop in which you spend them then has to buy its stock locally too, or else pay a 3 per cent fee to convert the Bristol Pounds back into sterling.
As the Bank of England explains: “The concept is that the payment arrangement encourages consumers to purchase goods and services from local businesses that in turn purchase goods and services from local suppliers, or pay their staff partly with the local currency.
“The intention is that the scheme creates a ‘positive multiplier’ effect, keeping spending within the local area.”
Time Magazine explains this also means more local business: “Money spent at locally owned companies tends to create more business for local suppliers, accountants, etc.
“The New Economics Foundation (NEF), a London think tank, compared the effects of purchasing produce at a supermarket and at a farmer's market and found that twice the money stayed in a community when folks bought locally.”
The report went on to quote NEF researcher David Boyle: “’Money is like blood'. Local purchases recirculate it, but frequent mega-chains or online retailers, and ‘it flows out like a wound’".
Ciaran Mundy, director of the Bristol Pound CIC, told This is Bristol: “We hope to maintain the money supply on the ground, so we have a more buoyant money supply, with more money going around the Bristol economy.”
Reduce the environmental impact of trading: Local currencies strive to encourage businesses to trade locally, with one another.
As Mr Mundy illustrates: “If businesses trade with each other and look for supply that can be obtained locally, that’s going to reduce the environmental impact.
“You have a shorter supply chain, less trucks driving around.”
Detailing the aims of the Brixton Pound, launched in September 2009, the New Economics Foundation explained organisers hoped it would cut “carbon emissions by encouraging locally sourced goods and services”.
Support independent businesses: By spending local currency you are giving the independent retailers which accept it a boost.
The New Economics Foundation explains: “Local currencies help to create thriving communities, and help keep our high streets from turning into Clone Towns.”
Plus, the media coverage surrounding the launch of local currencies helps in turn to raise the profile of the participating businesses.
After the launch of the Brixton Pound, Lambeth Council estimated the scheme brought £100,000 of media exposure directly to businesses in the area.
The Bristol Pound website explains: “Spending in the target area boosts local economic activity by retaining money in the area.
“This encourages and strengthens economic ties between the people of the area and local traders.”
Local currencies have been launched elsewhere and some have had limited success. What makes the Bristol Pound different?
Local currencies have been launched in places such as Brixton, Totnes and Stroud, but the Bristol Pound is innovative in that it uses a fast and straightforward electronic payment system. Bristol Pounds can be spent online and on any mobile phone on any network, as well as in person.
Another pioneering aspect is the partnership arrangement with Bristol Credit Union, which offers the security of an authorised deposit-taking institution.
Each Bristol Pound is backed pound-for-pound by sterling deposits, so taking part incurs no more financial risk than depositing money with an authorised and regulated institution.
The Institute of Place Management also maintains the scheme could take off because a large amount of Bristol retail is independent.
It wrote on Twitter this morning: “Good to see the media coverage of the launch of @bristolpound. With 70% of retail there being independent the currency could really work.”