Local Currencies Assist Small-Business Development
During the past 20 years many nonprofits have created local currencies -- a spin on barter -- to help support small businesses in their communities. Those currencies promote economic diversity and direct local resources to local pockets rather than to global companies' vaults.
Most local currencies in the United States are modeled after Ithaca Hours Inc., a program launched in upstate New York during the 1991 recession. Ithaca Hours issues notes in several denominations, with one Hour equal to $10. A governing board meets monthly to assess the state of the system and make policy decisions. At the beginning of this year there were $40,000 to $50,000 worth of Ithaca Hours in circulation, and more than 1,000 individuals and businesses regularly accepted payment in Hours, either alone or in combination with cash.
Similar organizations -- some short-lived -- have sprouted up in 60 cities across North America and Europe, sponsoring currencies such as SEED (Mendocino, Calif.) and BREAD (Berkeley, Calif.). Outside the United States, LETS (Local Exchange Trading System) predominates. Unlike Ithaca Hours, LETS has no paper currency and no central bank equivalent. Any member can create credit simply by agreeing to a sale, and all transactions are reported to a registry, which debits and credits members' accounts.
The LETS model is especially popular in the United Kingdom, where 450 groups claim more than 40,000 members. Currencies' names are colorfully localized: members in Canterbury reckon in tales; in Carmarthen, they tot up merlins; and in Edinburgh, reekies are the virtual coin of the realm.