Town Introduces its own Currency

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aq6uUiFX9_ZM

by dangoldin • 18 years ago

15 13 18 years ago

jwilliams2• 18 years ago

I once had the idea for my own "personal currency"... I would set the exchange rate... For some reason it didn't really catch on.

The article alludes to it, but in the UK, legal tender is a bit sketchy at best: http://en.wikipedia.org/wiki/Legal_tender#In_the_United_King...

The reality of this really comes home when you try to spend your Scottish Pounds in England (I got caught by this first time I went to Scotland).

Of course, the counter-example is the Euro - which the participating countries seem to grumble about a bit (it's blamed for inflating some prices)... but as a tourist it's a godsend.

dangoldin2• 18 years ago

I think the reason it's frowned upon is due to tax evasion reasons. Imagine paying your employees in this town's currency and then having them spend it within the town.

Protophore2• 18 years ago

I'm not quite sure I follow your reasoning here. How does paying your employees in the town's currency allow tax evasion? You would still have to report paying them the money.

You could pay them under the table (not report it to the government) in cold hard cash using the British pound just as easily as using a local currency. I can't see how using a local currency would make it any easier.

Protophore2• 18 years ago

I heard about this a month or so ago on NPR. I don't see the benefit in it really. Unless they can back their currency with gold or something else it will continue to fluctuate in value with the pound.

Furthermore I can't see why people would really want to have this town's currency other than as a collectors item. You can only spend it in this particular town, and not even at all of the businesses there.

It's been said that this will help keep business (money) in town. Meaning that locals will be more likely (forced) to spend money at local businesses if they have the local currency. But why would anyone want to restrict themselves like this as a shopper? What's to stop them for refusing to accept change in the local currency or to trade it in at the bank for official British currency?

jsmcgd• 18 years ago

I agree. Can someone explain how this currency which is tied to Sterling protect people from the devaluation of Sterling?

ken• 18 years ago

http://en.wikipedia.org/wiki/Ithaca_Hours

mattmaroon• 18 years ago

Ha, I was just coming to post that. On a related note:

http://en.wikipedia.org/wiki/Tax_evasion

alexfarran• 18 years ago

I was there last night. At the launch you could buy L£22 for £20. Local traders are offering incentives, such as discounts if you pay in L£.

It doesn't force anyone to spend their money locally, because you can always trade your L£ for sterling. It's more like a constant reminder and a helpful system for keeping money in the local economy.

Income in L£ is counted as sterling as far as the tax man is concerned. Stewart Wallis of the NEF mentioned a local currency scheme in Australia where the taxes could be paid in local currency. Of course when it came time to spend it it could only be spent locally. So they re-roofed the community centre.

There's a web site here: http://www.thelewespound.org/

streety• 18 years ago

Statements like "Totnes, a town of about 8,000 people" and "In Totnes, there are about 5,000 notes in circulation" suggest to me this is no more than a gimmick. Even as a local currency it can't work.

andyking• 18 years ago

I read an interesting article in the paper the other week about Zimbabwe, where the Z$ has been inflated so vastly that it is valueless for all practical purposes.

The government there have started to ration petrol and issue vouchers entitling the holder to 20 litres of the stuff. People started to swap these vouchers between themselves for other goods and services, and in many areas of the black market petrol vouchers are approaching the status of a de facto currency. Instead of a loaf of bread costing Z$6 billion or something, it'll cost you two litres of petrol.

It has fascinating implications--because the official currency is backed by nothing and is now meaningless, these bits of paper backed by a tangible quantity of a valuable commodity (ie. petrol) have effectively become their own currency. People are trading them with no intention of redeeming them for petrol, in the same way as you'd never go and ask for £10 of gold for your tenner. Perhaps something inventive like this would be a better way of running these town currencies than simply pegging them to the pound.

Town Introduces its own Currency

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