Posted on 09/20/2012 7:23:56 AM PDT by Lorianne
It is a direct assault on global trade. The city of Bristol has launched its own currency, which cannot be used in Bath, never mind Berlin or Bombay.
More than 350 firms in the city have signed up, making it the UK's largest alternative to sterling.
Unlike previous schemes which have relied on paper, the Bristol Pound can be used online, even by mobile phone.
But other local currencies have never really taken off, so can the Bristol scheme really fly?
Local 'locked in'
Ciaran Mundy has been working on the scheme for three years now. To him, this is much more than just a local curiosity.
He said: "If you lock the money into the area, rather than it going into the international finance system then you keep more money actually working in the city here."
The idea is to help local traders by issuing money which customers can only use in their shops. In turn, customers know that the shop must then buy its stock from a local supplier, or pay a 3% fee to convert the Bristol Pound back into sterling.
(Excerpt) Read more at bbc.co.uk ...
I’m afraid they’re spitting into the wind. People just aren’t going to voluntary get paid in a currency that is less useful than the standard.
If your new currency is less exchangeable you better have a pretty good reason for me to use it like “more convenient” (as credit cards are) or “we’ll shoot you in the head if you use something else” (as most legal tenders around the world have backing them up).
If you are going to have a new currency at least make the notes pretty. I like the tenner with the anti-slavery lady but the rest are ugly and reeks of PC.
Actually, this is a grand idea that I fully support, though would go at it differently.
What they are creating is called “Scrip”, and though it is not legal tender, it can be a godsend when the primary currency is in crisis. It was used extensively in the US during the Great Depression, and it kept many local markets and government afloat and functioning.
It acts as a “complementary currency” to the primary, “legal tender” currency, and masterfully uses Gresham’s Law, which says that “bad money pushes out good”, so that people use the less desirable of the two, and save the more desirable. Thus, at a local level, it can help to stabilize prices of a wildly fluctuating national currency.
The Scrip market is also tightly controlled for prices that only change at regular intervals, like monthly. This tempers both deflation and inflation in the primary currency.
Modern changes to scrip I would make would be, first, “transfer card” scrip instead of paper currency. You get a card that has an encrypted matrix bar code printed on it (holding up to 1000 characters), that can be read by a cell phone camera.
When you want to sell or buy something, the seller takes a picture of his bar code, then enters his PIN; then he takes a picture of the buyers bar code, scans the bar code of the item to be sold, then hands his phone to the buyer to indicate that the amount is correct. Then the buyer enters his PIN, and the sale is done.
Sales tax is taken out automatically.
Importantly, Scrip is only as strong as the trust placed in the issuer by businesses and the public. Since states cannot issue their own currency unless is it backed by gold and silver, they cannot run a Scrip company, but they *can* heavily license, regulate and audit a private issuer.
It’s good to know this stuff, because it again becomes a very viable option if the US economy tanks.
Appreciate the clear explanation!
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