Currency Development

LoseDrawWin

Evening,

This is my first post here but I'm going to get straight to the point.

After reading about Lewes the West Sussex town introducing their own currency to boost the local economy I was interested in the legal steps that you would have to take in order to convince the local council to bring such a scheme to your town?

Personally, I've been interested in registering my own charity within an industry that I am passionate about which acts as a catalyst for promoting and funding for other charities through assets in the industry.

The idea of producing a currency that can be used within 30-50 different towns across the UK where the industry basis its main financial source of income from consumers would be the main goal.

Savvy_Sue

Welcome.

You could probably start with this site. No idea if it's any use or not, but it's what comes up on a google and it claims to give an overview of schemes.

paddyrg

Local currencies have been tried over and over, they pretty much all fade and fail whether sooner or later.

One problem is that you cannot use them to evade tax (VAT, etc)., so even if you take £120 in 'local' currency, you have to give HMRC £20 in real money. But you cannot pay your suppliers in 'local' currency - so the wheels don't keep going around.

Currencies depend entirely on confidence, you can see what happens when confidence drops right across the Eurozone right now. To keep confidence, people have to feel safe keeping value in your currency - and if they lose value with each transaction thanks to national taxation, confidence tends to be short-lived.

Don't get me wrong, I love the idea in theory - just there seems to be a lot of problems with keeping the momentum.

LoseDrawWin

Thank you for both of your replies,

Yes I understand it's difficult but I wouldn't assume this idea was a near impossibility though given how many local businesses could be connected together throughout the country.

Then again you'd have to ask questions about the legitimacy of the idea given that a local currency is meant to add value, power and prestige into a community so why would people want currency that also represented another town.

It would take a lot of hard work convincing people but I feel the platform is there to really embark on something big.

heretolearn_2

I'm not quite getting this. You want to work with lots of towns;each with its own currency? Or you want to work with lots of towns sharing one currency? If it's the latter then it's no longer a local currency scheme so loses any advantages over using normal money.

also I don't think you'd manage to persuade the Charity Commission that this is a charitable aim.

Something similar is Bartercard. Not a great scheme. Businesses tend to join all full of enthusiasm but not much happens so they leave. It's business model is all about signing up new members. (As far as I can see, I could be wrong).

paddyrg

By all means give it a go - but do remember parallel currencies have come and gone many, many times before - unless you have something radically different to offer history would suggest it to be a somewhat risky path...

Would I join a parallel currency which was based at the other end of the country? Not a chance. You have to have absolute confidence in a currency or it is worthless. With a local-only currency you have some benefit from social pressures to keep people honest, but if I'm based in Devon and the currency is based in Liverpool, how much faith will I have that there isn't 'quantative easing' diluting the value of my holding? And if there is even a small panic people will try to offload the currency ASAP so as not to be the one left holding the worthless tokens. It could collapse overnight unless it was backed by 'real' money or other fixed assets - and if it is backed by/tied to a real currency (for tax purposes etc it has to be anyway), why not just use that real currency?

All the best, but sorry to say I'm not going to join in :-!

LoseDrawWin

As a local Business you're telling me you wouldn't want your product in another catchment area where you can get crowds of up to 20,000 on a good weekend and around 4,000-6,000 people on a normal weekday.

There may be only 18 times across a 12 month period in which some venues may be open and it wouldn't dilute the product at all but rather offer a sense of exclusivity and prestige to local businesses who would be asked to deliver a unique array of products that resembles their towns history.

paddyrg

LoseDrawWin wrote: »

As a local Business you're telling me you wouldn't want your product in another catchment area where you can get crowds of up to 20,000 on a good weekend and around 4,000-6,000 people on a normal weekday.

There may be only 18 times across a 12 month period in which some venues may be open and it wouldn't dilute the product at all but rather offer a sense of exclusivity and prestige to local businesses who would be asked to deliver a unique array of products that resembles their towns history.

Not if it cost me £20 cash for every £100's worth of local currency deals I did. My suppliers will not take parallel currencies, so I would be better off giving stuff away than suffering the VAT on parallel currency transactions!

paddyrg

Sorry, that was a bit terse - let me expand a little...

The whole supply chain needs to accept some kind of exchangeable money. Let's say I sell Hyundai cars, I pay £4k, sell for £5k +VAT (ie punter pays £6k, my profit is £1k, VAT is £1k to keep it simple - let's ignore all other taxes and insurances etc for now). If I have a non-convertable currency, I have to pay £4k cash to Hyundai, £1k to HMRC in real money, costing me £5k cash for £6k worth of the new currency. In 4 cars time, I have spent £20k, and have £24k in vouchers. What can I get with those? Only whatever is on offer - probably a lot of cakes, pies and organic beans, maybe some home crafts toboot, a massage possibly... But nothing I could really class as business stock. Or I could try to dump my currency in a swap for real money - which would cause a run on it, making it worth even less!

Now, if Hyundai and HMRC both accepted the currency, no problem - but they don't, they want £ in the case of HMRC, and another convertible currency for Hyundai. They can't swap cakes and massages for the steel and labour it takes to make a car. If only! Luckily there are currencies we can use, £,€,$ etc which are effectively backed by governements, which means international trade can work...just means a parallel currency is of negative value to anyone caught up in that supply chain.

bangersnmash

I've looked into these Mickey Mouse currencies a few times and they appear to have no benefits and lots of disbenefits.

They simply limit everyone involved and cause cost and effort and time converting them to real cash any time anyone wants to do anything with it, as touched on by other posters here.

I discussed this on another thread a while back and noone was able to suggest anything useful or positive about it at all.

It looks like a non starter.

However, as I said on the other thread, evidently there is some supposed benefit that some people perceive about it hence various initiatives around this country and the world.

But I've yet to see the supposed light in the darkness...

lincroft1710

LoseDrawWin wrote: »

Evening,

I was interested in the legal steps that you would have to take in order to convince the local council to bring such a scheme to your town?

Most councils can waste enough council taxpayers' money already without entering into pointless schemes such as this one.

As previous posters have pointed out, for so many reasons, this is a complete non starter.