Funny Money

You need a new pair of shoes. Does it really matter whether you
buy them from the local merchant or a national chain? It does, for
your community. Buying local helps keep your money circulating
through your hometown: paying your neighbors? salaries, boosting
local government revenues, and so on. But when you fork over your
cash to a national chain, your money gets whisked away in that
night?s deposit.

To keep money flowing around town longer, communities across
North America have created special local currencies to encourage
local spending. Towns from Ithaca to Gainesville to Tucson have
introduced new currencies, often adorned with pictures of local art
or historical figures. And some have had great success convincing
small businesses to accept them.

This idea is not new (many places did it during the the
Depression), nor are the problems associated with it. Lawrence,
Kansas, found out the hard way that for local currencies to
succeed, they need to be fully integrated into the larger economy.
People in Lawrence happily spent the local REAL dollars (which
featured local resident and novelist William Burroughs on the
three-dollar bill) at small businesses across town. But merchants
eventually ended up with stacks of local currency and nowhere to
cash in the bills. ?Businesses need to be able to make deposits and
withdrawals,? says Denis Highberger, organizer of the REAL dollars
program, which was put on hold in late 2002 until organizers
develop a banking and debit card system. ?This is essential for
keeping a local currency going.?

British Columbia?s Salt Spring Island Monetary Fund (SSIMF)
addressed these issues while developing its Salt Spring Island
dollars in 2001. The program is now the very first alternative,
local currency in the world to be completely backed by a national
currency. ?The main benefit we are seeing is by the tourist
community buying the money and then taking it off the island,? says
Don Monteith, SSIMF director. ?That?s cash in the bank for us.?
Three banks on the island accept Salt Spring dollars on par with
the Canadian dollar. Since March 2002, the currency has even been
available through ATM machines. The result? Great success. With 95
percent of all small businesses on the island now accepting the
local bills, some are offering an incentive for using them: $1.10
worth of goods for each Salt Spring dollar spent. And that keeps
the cash flowing?all around the community.

Nick Garafola is Utne?s editorial
assistant.

Tell Me More

Money: Understanding and Creating Alternatives to Legal
Tender
by Thomas H. Greco Jr. (Chelsea Green, 2001)

Local Currency Groups (compiled by E.F.
Schumacher Society)
www.schumachersociety.org/cur_grps.html

Gallery of Local Currencieswww.zpub.com/notes/LocalCurrency.html

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