September 22, 2014; Forbes
Local currencies and the use of bartering tend to show up when the larger economy leaves communities stressed and at least partly broken. And so it makes sense that as the recession leaves many behind, we would see these forms proliferating.
For instance, in Santa Barbara, California, there’s a new, odd currency in town. SB Missions were introduced in July, after California Gov. Jerry Brown signed a law allowing the issuance of currencies other than the dollar. But predating that action, California was home to dozens of community currency systems.
Also in July, around the same time on the East Coast, New York set forward a draft framework for regulating virtual currencies. These regulations will apply not just to the big dogs like Bitcoin, but also local digital currency systems like Ithacash in—you guessed it, Ithaca, New York. Scott Morris, founder of Ithacash, believes there may be a new level of openness among regulators. He says that at the very least, “they understand there’s plenty they don’t understand” about alternative currencies.
On the website of Ithacash, the trend is described as follows:
“‘Alternative,’ ‘Local,’ and ‘Community’ currencies are types of money designed to reconnect us with the people living around us, the place we live in together, and with that sense of shared purpose that makes a community. By recirculating in one city or region, these currencies are continually passed from one set of hands to another, helping people get what they need. Home-grown currencies provide an effective alternative when traditional money just isn’t doing the trick.
“Ithacash is just one of many new money systems appearing all around the globe as more people are discovering how easy and fun it is to use these currencies in bettering their communities.”
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Writing for Forbes, Katie Gilbert says, “An increasing number of communities face the exact challenge alternative currencies are designed to address: a shortage of dollars and a dwindling number of ways to earn them, mixed with no diminishment in peoples’ practical skills within a community, or the number of hours in a day. Local currencies can offer a way to expand the assignment of economic value, so that activities like volunteering in a local garden, giving a neighbor a haircut, or reading to a homebound senior can help a person earn access to food and other basic needs, even if dollars never change hands.”
Gilbert reminds us that these types of local currency systems foster interdependence and human relationships and generally emerge when larger economies are failing communities:
“During the U.S.’s Great Depression in the 1930s, several hundred municipalities and other groups across the country issued local currencies to keep the gears of regional economies turning. In the midst of its own depression, in 1932, the small town of Wörgl, Austria, leaned on a local currency issued by its mayor to climb out of a deep unemployment ditch. In response to more recent economic turmoil in Greece, a complementary money system called Local Alternative Units (“tems” in Greek) has emerged.”
Chris Tittle, director of organizational resilience at the Sustainable Economies Law Center, says this new generation of currencies is driven by “a combination of economic necessity and technological innovation.” Tittle also points out that alternative currencies allow communities, rather than banks, to make decisions about where capital should flow:
“If we look at our national monetary system, over 95% of money in circulation is issued by private, for-profit banks as debt. The vast majority enters the economy through the housing and financial centers; that is, not into productive sectors, like manufacturing and food production—the things that are actually meeting people’s daily needs.
“Local currency systems empower communities to decide where money should be circulating themselves. It’s empowering a different group of stakeholders to have a say in their own economic future.
“In California, there’s been a 60% drop in small-business lending since 2007. That’s particularly impacting African-Americans, women, Latinos—small-business owners from historically marginalized societies. So small loans are drying up, and in the absence of access to those traditional forms of capital, communities are just deciding to create their own ways of capitalizing and enabling exchange for small businesses.”
—Ruth McCambridge
