Wednesday, 19 September 2012

I wish Bristol well with their 'pounds' but it won't work


I'm a big fan of alternatives to money. Especially in this age of governments debasing the currency year after year and pretending it's all for our good (rather than as a favour to their pals in banking and property development or to cover up their past mistakes). So the Bristol 'pound' sounds like a great idea - here's the BBC bigging the idea up:

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. 

So that's progress. The problem is that the motivation for the introduction of the Bristol Pound isn't escape from the tyranny of state controlled money but a rather righteous desire to 'keep more of the money in Bristol'.

"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."

This is - in effect - an attempt to game the local multiplier. But the problem with the Bristol Pound is that there's not incentive to play. For sure, the trader (or other user) is locked in because there's an exchange fee of 3% to turn Bristol Pounds into Sterling. So why should the trader go to the bother of converting real pounds into Bristol 'pounds' knowing that there's a built in loss and there are only 350 businesses who will accept them. Businesses that don't include any suppliers outside Bristol.

When we look at successful alternative currencies they either fill a real need (for example Linden dollars in Second Life) or else contain a strong sales promotional element. The Bristol Pound would have a lot greater consumer purchase (if you pardon the pun) it it offered discounts at the 350 businesses rather than simply trying to pretend that there really is a "local multiplier effect" and you can game it with a make believe currency.

I hope I'm wrong - perhaps Bristol Council (I'm guessing it's the City's biggest employer) will offer pay rises to staff only if they take them in Bristol Pounds. Or perhaps offer an incentive on personalisation payments for social care - 110% of value if 20% is taken in Bristol Pounds. If something like this happened then there's a chance that the new currency will work. Otherwise it will splutter and struggle on without really making much of a difference in the City.

Finally the lesson from LETS type currencies is that you need a big area - the successful Chiemgauer system covers the whole of Bavaria for example.So the whole of the South West is a better basis for success than just the fine city of Bristol.


1 comment:

Curmudgeon said...

And, if staff were paid in Bristol Pounds, would the taxman accept them? ;-)