Let us imagine the following situation:
One morning you go to the coffee shop to buy your favorite morning drink, but realise you left your wallet at home and the only money you can find in your pockets are a few coins, not nearly enough to pay for your magic liquor that makes morning better. Now your brain is having an adrenaline rush, it must find a solution so that you leave the coffee shop with the hot drink in your hand. What can you do? Lucky enough, you live in a city that has its own currency and the community work you’ve performed has brought you monetary benefits in the local currency which is accepted as payment at stores in town. Now the adrenaline is wearing off, just in time for the coffee to kick in.
This is just a trivial example, but local currencies have the potential to transform communities if they are integrated into a vision and given the right purpose.
Community currency (CC) is not a new concept as in the 1960’s Canadians were advocating for them. Two decades after, the number of complementary currencies on the market was increasing and by 1993 there were five hundred of them, a number that increased eight times by 2003.
Community currency is a complementary exchange medium within a local community that is intended to provide an alternative to the standard national currency. Its use is generally based on an agreement between parties exchanging the currency. For example, in a local community, these parties can be vendors, volunteers in certain programs or solution providers. According to Jérôme Blanc of Laboratoire d’Économie de la Firme et des Institutions, complementary currencies aim to protect, stimulate or orientate the economy.
Today, community currencies have the potential to transform communities.
The New Economic Foundation defines community currencies in the “People Powered Money: designing, developing and delivering community currencies” report as ‘a type of complementary currency that has the explicit aim to support and build more equal, connected and sustainable societies. A community currency is designed to be used by a specific group.’
The shift towards new economic systems like the creative and sharing economies is providing the right environment in which to foster the benefits of local currencies.
Talking about purpose, local currencies can have a few and depending on the larger vision of the community CCs can be integrated in a smart way to foster economic growth and quality of living.
New Economics Foundation partner, Community Currencies, identifies the main purposes of community currencies as:
- Democratising services and organisations – time credits for volunteering encourage people to actively engage in their community while making services, such as elderly care, more democratic.
This approach can strengthen the collaboration between different organisations while providing better services with fewer resources. Citizens bring their contribution to the community through volunteering acts and get rewarded. Exchanging time for CCs and earned CCs for services sounds like an engaging way to increase the quality of life.
- Supporting small and medium enterprises: Community currencies can serve as a means to promote independent shops over large corporations since they keep on circulating locally. They can also help SMEs support each other financially by lending and receiving credit, goods, and services within the currency network. Examples are: Bristol Pound, SoNantes, TradeQoin, Chiemgauer.
The circular economy requires resource productivity in order to tackle waste reduction and to avoid pollution. Implementing a community coin network is a valid solution that can boost the economy while also being environmentally friendly and socio-dynamic.
- Countering inequality and social exclusion: Specially designed currencies can address inequality issues by giving everyone the chance to get involved in their community; for instance by rewarding participation in voluntary programs like Spice Time Credits
Getting involved in volunteering activities keeps people connected. Socialisation is very important to elderly people and while keeping busy, they can earn coins which can be used to engage in different family activities.
- Addressing environmental impacts: Community currencies can play a role in the better valuation of environmental resources and providing an incentive for more sustainable behavior. For example, the Belgian Portemonnee rewards residents for environmentally positive actions such as composting. Reward currencies can also encourage businesses to adopt more environmentally sound practices.
Community currencies are a ‘bottom-up’ economic approach to tackling climate change, foster social inclusion and create economic growth within an area. They will increase the sense of community within a certain region and help to promote local entrepreneurial activities. They provide the opportunity to build a strong and healthy social system.