By Chris Sunderland, Bristol Pound and Real Economy Director
What would it be like if we did a local currency at scale, across a whole city? What would it be like if we had an electronic means of exchange as well as a paper currency? These were the two questions which the Bristol Pound set out to answer. The Transition movement was booming across the world at that time and everyone was aware that serious changes had to be made, not only to our individual lifestyles, but also to the very structure of our economies. We had benefited here in the UK from some brave experiments. Totnes, Lewes, Brixton and Stroud had all launched a paper currency. They had proved that these systems could attract attention to local traders, but we wanted to explore the possibility of creating systemic change, truly benefiting the local economy by means of the local multiplier effect and for that there was a need to step up in scale.
Some people said we were brave, others, slightly mad. But the very small team grew from two, to three, four, six, then eight, as we put together careful and detailed plans for what we would do. Someone volunteered the idea that we could make payments by text, that the technology was all there and simple to execute and, to prove it, he built us a prototype. We burrowed into the detail and wrote a hundred pages of feasibility study. Our aim was to show people we could actually do this.
From the earliest phase we recognised that our crucial challenge was to attend to public confidence in the system. Some people were bound to say it was ‘funny money’, not quite real, and certainly not to be trusted. So, in response, we committed ourselves to backing every paper Bristol Pound with a pound sterling, which would be locked away in a trust account so that even if we went bankrupt, people’s money would be safe. Similarly, we built confidence through a partnership with Bristol Credit Union, who agreed to manage our electronic accounts. Bristol Credit Union are regulated by, what is now called, our Financial Conduct Authority and already managed accounts to a value of several millions pounds.
The second challenge regarding public confidence concerned significance. We were aware that the public would quickly judge a local currency as to whether or not it would ever be significant in the life of the city. If they thought it would just be a gimmick, they would not participate and just wait for it to melt away. So we went to the local authority and said, ‘We would like you to consider taking Bristol Pounds in payment for business rates’. At first they were hesitant. How could they realistically change all their accounting systems for this thing that was likely to fail? Pressing on with the detail, we found a way that the public could pay their business rates in Bristol Pounds without causing a headache for the council. And so the deal was done. And our potential businesses knew that, if they had Bristol Pounds and found them difficult to spend on with other member businesses then they could always pay their business rates. This proved particularly important in our trader recruitment.
So, we had some detailed plans that we were confident in, and our next task was to engage the city. Our paper currency needed designing, and we had some great designers working pro bono for us. So we created a template and put it out to the city to fill in the design. We received more than two hundred entries from professional designers, keen amateurs, and many school children. Then an independent panel, drawn from different communities of the city, chose the winners. The results have been very well received. (ref picture, the one pound, face side)
The design competition attracted attention from the media, and from another unexpected source, the Bank of England, who wanted to enquire about our ‘ambiitious’ scheme. As a result the team found ourselves in Threadneedle Street, visiting with people from the Bank of England, the Treasury, the Financial Services Authority and the Financial service compensation scheme all at the same time. The meeting was slightly nerve wracking, from our point of view, but actually very constructive, as we cleared off many of the legal questions at one meeting and left with a renewed confidence.
Several years had passed by now. We had begun our explorations in 2009. It was now January 2012 and we faced the big decision. Are we ready to launch? It was big, because we had almost no money. Aside from a large donation from a trust dedicated to developing our electronic software, we had almost nothing. We had just about enough to print the paper currency. By now we had a team of people, who were somehow able to give enormous amounts of time without hardly any pay, but we realised that to say we were going to launch was to give a commitment we could not draw back from. We went for September 19th 2012.
As we drew closer to the launch day, our office got noticeable quieter and more intense. A trial of the text payment system was under way. Exchange points were being developed across the city. The individuals and traders were signing up to the system. And it all had to be ready for the 19th.
The Corn Exchange lies in the heart of the historic part of Bristol. The short pillars known as the ‘nails’ in Corn Street are places of ancient exchange, where people swapped gold for goods, paying, as we say ‘on the nail’. On the 19th of September at 12 noon the Lord Mayor, stood by one of the nails in all his fine regalia, held up a Bristol pound and declared, ‘What will anyone give me in exchange for my Bristol pound.’ And a local trader stood forward bringing a loaf of bread and said ‘ I will give you this loaf for your Bristol Pound.’ Then the cameras whirred and we had a party.
The media frenzy that started that day has not really stopped. We had coverage, not only from our BBC, but from media providers from Europe and around the world. I know some people in Bristol who heard about the Bristol Pound from their friends in Australia! There has also been extraordinary interest from China.
Bristol Pounds went on sale at the launch. Serious numbers were taken as souvenirs, but, more importantly, many Bristol people took them for use. Members were still joining at the time, and are still joining today. We have seen a gradual increase in text volumes from the start, with a total number of Bristol Pounds in circulation now estimated at around 300,000, one year on. This is a good start, but it is only a start given the size of Bristol and its economy.
At this stage our sober estimate is that we have proved the system, but that we will need three years to establish it. We need to get the number of transactions to a significant volume, measured in millions of Bristol Pounds and we need to expand our geographical coverage to take in all the very varied districts of the city.
Significant recent steps towards volume include; an agreement with our largest transport provider that the paper currency should be acceptable on the buses; an agreement with the local authority to accept domestic taxes in Bristol Pounds; first steps in the council procuring services in Bristol Pounds; well-developed negotiations with an energy company.
In terms of geographical area, we have noticed that our first joiners have focussed on particular areas of the city, where we have strong high streets with many independent retailers. Other areas have few shops and very little obvious presence of the local currency. They include some of the most disadvantaged communities in the city. In response we are just launching an initiative based on forming buying groups in these areas, which will source food and other products from local producers using the local currency. It is to be called the Real Economy and will also involve pop up markets and support for new local enterprises. Our inspiration here is the experience of buying groups in Italy, where the Gruppi diAquisto Soledale network, has made a substantial contribution to local economies.
Our links with other local currencies and their infrastructure support in UK and Europe has been strong and positive. Our electronic payment system is based on Cyclos, a software package created by our European partners STRO and delivered to us by Qoin in the Netherlands, in partnership with the UK based Brixton Pound.
Our European connections are continuing with a major new EU project in partnership with Sardex in Sardinia and a new local currency in Catalonia. The aim is to explore different models of local currency, including the provision of credit circles, to assess their potential impact on a local economy as they grow to scale. At the Bristol end this offers a new approach to volume trading and entails a new level of partnership working with the local authority and Bristol Credit Union.
Where will we be in three years time? Will we have truly established the Bristol Pound across the city? Will we be trading at a volume so as to provide a sustainable level of fees from transaction charges? Will we be able to demonstrate a significant local multiplier effect? These are the big questions. I can say at this point, we have plans and we are hopeful.
- Bristol Pounds are bought into existence with pounds sterling and are exchangeable in paper form, or by text or by online transaction.
- Membership of the scheme is open to individuals and businesses based in the city region. Membership offers the capacity to use electronic means of trading.
- Anyone can use the paper. It is available at a series of cash points across the city and through online ordering.
- Only traders can credit the paper currency to their accounts
- Any member can turn their electronic deposits into sterling and withdraw them at no charge, but few do this, recognising a commitment to try to spend their Bristol pounds as a means of supporting the local economy.
- The scheme takes fees through a small charge taken by the recipient of a text or online transaction.