The Return of Local Currencies
The past decade has seen a resurgence of these boosterish bucks. But do they actually redirect spending to mom-and-pop shops instead of big box stores and online retailers?
It looks like Monopoly money. Baltimore’s BNotes depict local heroes Frederick Douglass and Edgar Allen Poe. In Massachusetts’ Berkshire region, so-called BerkShares feature paintings of turnips or foxes, or other works by local artists. And in Michigan, Traverse City’s BayBucks feature what you’d expect from a waterside community: wetlands and wildlife.
Local currencies -- a hometown pride concept designed to encourage spending within a community -- have been around since the 1980s. The oldest local dollars still in circulation are Ithaca Hours, which launched in 1991. Many others have come and gone. But the past decade has seen a resurgence of these boosterish bucks. Today, dozens of cities and regions sport their own dollar that’s spent just like real cash at the area merchants that accept them.
In most cases, the currencies are valued on a one-to-one ratio with the U.S. dollar. But to entice users, the exchange rate favors shoppers. In Baltimore, for example, a customer who trades in $10 will receive $11 in BNotes. Merchants then absorb the difference -- they get $10 for every $11 in BNotes they trade in. The idea, says Jeff Dicken, director of the all-volunteer Baltimore Green Currency Association that administers the currency, is to have more control over who benefits from the currency. “The money is just a way for all of us to have our needs met locally,” he says. “It doesn’t need to benefit corporations, it doesn’t need to pay corporate bonuses.”
But do they actually redirect spending to local businesses? In Massachusetts, BerkShares coordinator Alice Maggio says much of the value is in the experience. “It’s hard to track because it’s cash,” she says. “But the cultural impact has been big. By getting some BerkShares and figuring out where you can spend them, you think more about what your options are and who you’re supporting when you spend your money.”
To work well, local currencies require a dedicated administrator who’s able to consistently promote and recruit new businesses. The Ithaca Hours program had that in its founder Paul Glover, who says he once sat down with a business owner who had too many Hours and wanted out of the system. He used his own money to exchange $100 worth of Hours and then helped devise a plan for how the owner could spend the remaining Hours locally on goods and services he needed. But since Glover handed over the Hours to a board a decade ago, the currency’s circulation has greatly diminished.
The economic benefits touted by supporters -- that local currencies protect mom-and-pop shops against the aggressions of big box retailers that send their profits outside the community -- aren’t proven. And, says Loren Gatch, a political science professor at the University of Central Oklahoma, the financial impact is negligible because local currencies represent a tiny fraction of the U.S. dollars circulating in communities. But there can still be an upside: In just three years, the Bnote has gone from 55 participating Baltimore businesses to 220. Eight years ago, BerkShares were accepted at 100 businesses; now more than 400 retailers in the region accept them. “Mobilizing local businesses and getting people to join, that’s actually an active community creation itself,” says Gatch. “It’s the mobilization that’s the benefit, not necessarily the creation of the currency.”