By Emma Haslett Monday, 06 February 2012

The Bristol pound: will it save the (local) economy?

Bristol is to get its own currency. Nice idea - but there isn't a lot of evidence local currencies are much more than a marketing gimmick...

It’s been tried everywhere from Totnes to Lewes and even Brixton, but now Bristol has joined the slew of towns and cities producing their very own currency. The Bristol Pound will (not surprisingly) have an exchange rate of 1:1 with sterling, and will include notes in denominations of £1, £5, £10 and £20. Apparently, more than 100 businesses have already signed up – although the success rate of local currencies isn’t exactly great…

As with all local currencies, the idea is that because you can only spend it in independent shops in the city, it’ll mean less cash goes to the likes of Tesco. Bristol’s version will be run by a credit union, and will include online banking – so locals can have a bank account where any money they deposit is automatically converted into Bristol pounds. Crucially, for nervous investors, that also means up to £85,000 of deposits are guaranteed by the Financial Services Authority. And security measures are tight: the notes take the same precautions UK-wide banknotes do, with a silver hologram and a gold foil strips.

The problem with local currencies, though, is that they’re not always a success. Apart from ‘leakage’, when locals sell the currency online to collectors, the idea has also been criticised for being nothing more than an elaborate marketing gimmick (perhaps if they offered people a better deal for their Bristol pounds, there might be a bit of substance to it). That’s often reflected in a relatively small takeup: while the Totnes pound (the first local currency, launched in 2006) still has 70 traders involved, Stroud’s version only has 30 – which doesn’t give those who have converted their sterling into local currency an awful lot of choice.

To be fair, Bristol’s version is slightly more advanced than previous ones. For a start, it’s the first scheme where businesses will be able to use the money to pay tax, including business rates. Which means they won’t be stuck with thousands of pounds of a currency none of their suppliers accept. And consumers will also be able to use it to pay bills online.

At the moment, thought, the scheme’s in its early stages: set to be launched in May, its notes still don’t have a design – the company behind it has just launched a competition. Admittedly, it’s unlikely it’ll single-handedly save the economy. But for the local traders involved, it might well help…

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