A Magazine about the Hudson Valley’s local economy, published by Hudson Valley Current.

The Growth of Local Currencies

A worldwide spending movement takes hold locally and abroad   

With colorful names like the Eco-Pesa, Brooklyn Torch, Detroit Cheers, and Palmas, local currencies are springing up all over the world. In fact, there are an estimated 2,500 such systems now functioning or proposed these days. In this country, Berkshares in nearby Western Massachusetts is one of the most well known and successful of these; our own Hudson Valley Current is still in the planning stages. Internationally, local currencies are very popular in Great Britain and in the British Commonwealth countries such as New Zealand, Canada, and Australia. Western Europe, Africa, and Asia all have numerous examples as well.
Local currencies are part of several broad trends in economics. The first of these is called “fiscal localism.” The “buy local” movement, which is well developed and supported here in the Hudson Valley, is an example of fiscal localism. A local currency, circulating as it does within a particular region, is a potent force for a local economy. It builds community, and it is also a psychological motivator, raising consciousness about monetary and economic issues. It brings up questions that are very useful to ask ourselves, like “Just what is money, anyway?”
Local currencies fall into the broader trend of “alternative currencies.” This term refers to just about any system of exchange that is not a national currency. Aside from printed currencies, there are time-based exchange systems such as the successful Woodstock Time Bank here in Ulster County, and Ithaca Hours. In Wales alone there are 116 such systems; there are about 100 in the US. Then there are mutual credit systems that also do not use currency in the usual sense of the word. A well known type of this system is LETS (Local Employment Trading System). There are over 240 LETS systems operating in Australia alone. All these types of systems and projects have their strengths and weaknesses. Many fail after a time. Thomas Greco, a leading writer on the subject, believes that mutual credit systems can actually replace money in the future if they are properly designed.
Alternative currencies need not be local. The Hub Culture community is an international social network that has drop-in work and social spaces for members in big cities worldwide, similar to BEAHIVE in Kingston and Beacon. Hub Culture also has its own currency, the Ven. Airline miles are another example of a non-local monetary system.
Another term you will hear in discussions of this topic is “complementary currency,” which refers to a monetary system that works alongside a national one. Not all complementary currencies can be exchanged for national ones, but they are all intended to complement, not replace, national currencies. The Toronto Dollar, Berkshares, and the proposed Hudson Valley Current are complementary currencies whose value is set in relation to the national currency, and they can be exchanged for that currency at banks.
One last important trend reflected in local currencies is what I call “Civil Economics.” The inspiration and leadership for these projects comes from civil society rather than governments or for-profit entities. They are community based, part of the “blessed unrest” that Paul Hawkin wrote about in his book with the same name. The worldwide flowering of civil society organizations is a real bright spot in human society these days. People are joining together to make a difference, whether it is in relation to environmental causes, serving human needs, or bringing creative thinking to the human predicament. Certainly in economic matters there is a profound need for new ways of thinking and relating to each other. There is a great deal of potential for civil society leadership to help shift entrenched patterns of economic influence and power by triangulating the often-unhealthy relationship between the governmental and business sectors.
Still, community based action is not necessarily easy. Lack of financial clout and political authority always creates obstacles, but lack of general public awareness is probably the biggest problem. In matters of money, we are deeply habit bound. Organizers of local currencies often feel the “little red hen” effect, which is the feeling that people are enthusiastic about something in theory, but the hard work and support may be lacking. They may be willing to use a system that’s already in place, but making it happen is a different story. Luckily a local currency is not a hugely complicated project. Here in the Hudson Valley, though there is a lot of economic distress, there is not the kind of starvation and total powerlessness found in other parts of the world. That may contribute to the low level of participation in economic activism in these parts.
In Kenya, by contrast, there is now a local currency called the Eco-Pesa (Ecological Money), which is a community business voucher to benefit the environment and economy of Kongowea, a slum district of Mombasa. There, the average business takes in about $5US per day, an amount that supports perhaps five or more people. The voucher acts as a currency that can be exchanged for local goods and services and redeemed for Kenyan Shillings. As Eco-Pesa can only be spent in local businesses within Kongowea, its use creates a direct incentive for residents to take an active role in their community while also helping the local economy and environment. By generating better circulation of money within a specific area, this currency does exactly what local currencies are designed to do in more developed economies: they support local businesses, empower community development, and build a sense of local kinship at a social level.
As we look at the process locally, we can take inspiration that we are not reinventing the wheel. Communities and regions around the world are doing it, and they’ve been doing it for quite some time. We can learn a lot from their efforts. The cool thing is this: as we design and build our local currency, we are building community from the start.
This work is the stage on which deeper aspirations are being worked out…aspirations for a more vibrant and creative society, for greater security and fairness, and ultimately for greater prosperity—the prosperity that comes from a truly healthy economy.
The Eco-Pesa: ecoethics-kenya.org/projects/eco-pesa.html
Brooklyn Torch: brooklyntorch.org
Detroit Cheers: metromodemedia.com/features/DetroitCurrency0115.aspx
Palmas: en.wikipedia.org/wiki/Banco_Palmas
Berkshares: berkshares.org
Hudson Valley Current: hudsonvalleycurrent.org
Woodstock Time Bank: woodstocktimebank.org
Ithaca Hours: ithacahours.com
Hub Culture: hubculture.com
BEAHIVE (Kingston): beahivekingston.com
Excellent general site on local currency: mainstreetcash.org
Thomas Greco, The End of Money and the Future of Civilization (Chelsea Green Publications)
Paul Hawkin, Blessed Unrest(Viking Press) blessedunrest.com
—David McCarthy