Sometimes called alternative, complementary or community currencies, they are currency schemes that are created and run by communities to run alongside the dominant national currency. Independent currencies can be used to purchase goods and services locally, but are not legal tender (i.e. they can’t be used to pay taxes). In the UK, the first local currency scheme was launched in Totnes, Devon, in 2007. Schemes followed in Lewes in 2008, Brixton in 2009 (followed by electronic currency in 2011), and Bristol in 2012. Now there are over 40 schemes in the UK, and around 5000 internationally.
Local currencies stay in local communities (rather than being taken out to pay shareholders), and are spent over and over again, strengthening the local economy (via the local multiplier effect). Local currencies are intended to be spent, not saved or lent, and therefore they accrue no interest and there is no inflation or speculation. They only work when used – a local currency is a means of exchange, not a store of wealth.
Check the Independent Money Alliance website, or get in touch with them to see if you have a local scheme in operation or in formation. There’s also an international database at the Complementary Currency Resource Center.
Currencies have to be regulated by the Financial Conduct Authority’s e-money payment regulations if they’re electronic. Bristol Pound have registered themselves as a small e-money institution, regulated by the FCA, so that they can offer regulatory assistance to other schemes, or allow them to operate under their regulatory protection so that they don’t have to go through the complicated registration process themselves. The FCA appear to be quite open to the idea, and happy to support innovative financial products.