Transition Culture

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3 Apr 2008

Towns to drive local economy with own currency

steen poundFrom the Western Mail. April 2nd 2008. By Stepffan Rhys. Original here.

IT WOULD be cash but not – quite – as we know it.

A group of Welsh towns is pushing to have its own currency as it tries to create a micro- economy, the Western Mail can reveal today.

The aim? To strengthen links between local businesses and consumers while reducing reliance on big business.

The scheme would be the first of its kind in Wales and would involve the production of banknotes which could only be used in participating towns and businesses in a bid to stop money “leaking” out of the area.

It is hoped the cashflow plan could be launched by as early as the end of the year in Lampeter, Llandeilo and Llandovery, with the banknotes’ design possibly being based on that issued by the 18th century Black Ox Bank – later incorporated into Lloyds Bank – set up by drover David Jones of Llandovery in 1799.

There are already some examples of towns and regions setting up their own currency in a bid to keep money circulating locally.

The Totnes Pound was launched by a group of volunteers last year at an exchange rate of 1TP for £1. There are now 6,000 Totnes Pounds now being spent at 70 participating businesses.

And BerkShares were launched in the Southern Berkshire region of Massachusetts in the US by a non-profit organisation working in collaboration with the region’s Chamber of Commerce. Somet 1.43m BerkShares, worth $1.29m, were issued in the scheme’s first 17 months and there are more than 300 businesses registered to accept them.

In both schemes, every unit of local currency is legally backed by an equivalent in official currency. The idea is to encourage people to spend their money locally.

Listed businesses are identified by window stickers and joint promotional material and businesses can restrict the amount of goods that can be bought with local currency.

“Local currency puts money back into local businesses whereas ordinary money takes it out,” said Rhiannon Rowley, of Transition Towns Llandeilo, an organisation working towards making Llandeilo a self-sustainable town in the face of climate change and rising oil prices.

“The intention is to try and re-localise as much as possible and to encourage this re-localisation by introducing new currency.

“They are hoping to launch in Lampeter by the end of the year and we will hope to follow suit in Llandeilo sometime after that.”

Nigel Topping, who runs the Totnes Pound scheme, said he was now looking at introducing 5TP notes and ways of transferring the currency electronically.

“Companies do this all the time in the form of Air Miles or Clubcard points – those are equivalent to money because you can buy things with them,” he said.

BerkShares organisers say on their website, “The purpose of a local currency is to function on a local scale the same way that national currencies have functioned on a national scale – building the local economy by maximising circulation of trade within a defined region. The currency distinguishes the local businesses that accept the currency from those that do not, building stronger relationships and a greater affinity between the business community and the citizens of a particular place. The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal responsibility for the health and well-being of their community by laying the foundation of a truly vibrant, thriving local economy.”

The currency scheme is an extension of the Transition Town programme operating throughout the UK. Llandeilo became Wales’ first transition town last year but there are now similar initiatives in Bro Ddyfi, Rhayader and Presteigne.

Transition towns focus on sustainability through renewable energy, allotments and farming but also aim to explore possibilities of water supply, waste recycling and “new economics”.

“One of the really interesting things about the whole transition movement is that it’s developing differently in different areas because the people driving the schemes forward have different priorities,” said Ms Rowley.

“It’s a real grass roots movements that is inspiring people to get involved.”

Comments are now closed on this site, please visit Rob Hopkins' blog at Transition Network to read new posts and take part in discussions.


Iain Davidson
3 Apr 7:45pm

Great to hear that a group of towns are looking at sharing one local currency! Here at the Findhorn Foundation Community we are on the 3rd edition of our local currency, the Eko, which comes in £E1, £E5, £E10 and £E20 denominations. As well as keeping the trade local, it is estimated to save local businesses around £1,000 a year in bank fees alone.

Of course this still pales into insignificance with the size of the BerkShares – wow over a $million – that’s serious ;-))

james greyson
27 Apr 10:56am

Great stuff, every area should have its own local money or LETS scheme. Not convinced though about the wisdom of a flat exchange rate to seek the ‘backing’ of a national currency. Looks like many ‘play now pay later’ economies are unravelling so tying local money to national currency is like lashing the liferaft to the sinking ship. National currencies don’t seem to be backed by anything besides people’s belief that they’re worth something. The fading value of the pound shows that faith in currencies cannot be taken for granted. If one day international banking loses its magical powers then it would be nice if local currencies were able to step forward until regular economics could be taken seriously again. These local currencies would be backed not by national money but by trust in local people’s promises to pay and in the value created by local efforts. So why not say already now that’s the backing?

Generating a local money supply by 1 for 1 exchange with regular money is nice and simple for pilot schemes but with a little more thought you could do much more. For example why not sell local money for the first 3 months for half the face value, to kick start a new scheme? Then sell it for 3/4 face value which gives a permanent discount advantage to local over regular money. Redeem local money at 1/2 face value, which gives an incentive to circulate local money rather than cash it in.

Hey presto you’ve got a neat local shopping loyalty scheme. The public could buy one local note for 75p (or earn it), then spend it in a participating shop to get a £1 discount on a £10 purchase. The shop could redeem it for 50p, so they give just a 5% discount in order to attract more business and fight the supermarkets. The currency scheme makes a small profit which provides capital investment in local projects such as food, energy, energy saving, composting and refurbishment.

It gets better… People working on these projects could be paid partly in local money which is self generated in the same way as banks create money from the interest on their loans. Except this time it’s not the banks that profit, it’s the whole local economy. Local food, energy, skills, services and products could be sold for blends of local and national money. The currency scheme, shops and individuals would all be trading with each other, either with locally printed notes or cards and mobile text messages. A web-based directory of products and services would help people find whatever they need.

One final advantage of not lashing the currency to sterling would be to play with the name. This could reinforce how the values of a local community are not the same as the invisible global marketplace. My favourite is Thanx, where each note symbolises the appreciation offered in return for someone’s help. It also reminds the government that local money is predominantly about social favours; only taxable trades should be taxed, not the whole show. When the government starts to realise that local money can leverage greater spending in regular money they will see it as a way to boost growth. Who knows, now that the ‘peak everything’ crunch is getting obvious enough even for them, they might some day start to help a bit?!

Iain Davidson
30 Apr 8:24pm

Hi James,

Nice idea and…

My understanding is that “local” currencies in the UK have to be registered with the Inland Revenue and as part of this registration/permission to circulate the notes, there has to be a 1-to-1 exchange with sterling. We are trying to find a way to excite more interest in our own currency (we are about 500 people so around the minimum size for an alternative currency) including using a discount scheme…

james greyson
1 May 9:57am

Hi Iain
HM Revenue seem to use the term local currency to describe a national currency when discussing international finances. I’ve not heard of any reference to their thinking and rules for really local currencies, just rumours. If anyone knows of a reference please tell me through my site (click on my name).

Registration of local schemes seems sensible. A 1-1 exchange seems arbitrary and unlikely to be defined in law. If it’s just a technical regulation then it could be changed when a handful of civil servants and a minister are persuaded that flexible exchange is needed to run a scheme able to leverage spending in sterling and thus to boost both local and national economic activity. Perhaps just a conversation with HMRC or if necessary excercising the Sustainable Communities Bill.

Am currently busy at the other end of economics (see my UN site at but would be keen to chat with anyone considering approaching HMRC or setting up a scheme along the lines envisaged above. Seems to be an opportunity for a well designed local scheme to serve as a case study for use globally.

Jane Thomas
15 May 9:39am

What a crackers idea! And how is this helping the environment, to produce yet more currency? Whilst some tourists coming to the area might find it a novelty, others will simply drive straight through. No way do I want to be paid in a local currency, thank you, seeing as the place where I work is a small rural town with nothing of interest to purchase.

james greyson
7 Dec 2:59pm

Jane, it’s not so much crackers as Christmas crackers! Local currencies are a fun way for any place to celebrate what it has to offer. Those places which have got sucked into the illusion that they have nothing of interest and that they must buy in everything from far away seem to me most in need of it. Time to pull apart obsolete ideas about money and discover the novelties within.