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Bookmark and ShareAndy Wimbush is nef‘s Communications Assistant and blogmaster.

This week sees the launch of the UK’s first ever urban local currency: the Brixton Pound. As the local Lambeth think-tank, nef is supporting the scheme, which the organisers hope will keep Brixton a diverse retail environment, full of independent shops, traders and craftspeople, as well as cutting carbon emissions by encouraging locally sourced goods and services.

The B£ will be first spent in the Dogstar, Coldharbour Lane, Brixton, on Thursday evening, after a launch event in Lambeth Town Hall, with speeches from Transition Movement founder Rob Hopkins, Lambeth Council’s CEO Derrick Anderson, and nef‘s own David Boyle, co-author of the forthcoming book The New Economics.

The B£ team have put together a great little animation about how the currency works and why we should use it. To find out more, visit http://brixtonpound.wordpress.com/

Bookmark and ShareAndy Wimbush is nef‘s Communications Assistant and blogmaster.

We’re pretty enthusiastic about alternative currencies at nef. We have a ‘funny money’ wall decorated with Berkshares, Totnes Pounds, Lewes Pounds and Time Bank dollars. Since these notes are only accepted by small local businesses, they keep money circulating in their respective local economies, rather than being leaked out out the area through chain stores. Local currencies help to create thriving communities, and help keep our high streets from turning into Clone Towns.

So we’re pleased to report that a new community currency will soon be circulating not far from nef headquarters. A few enterprising souls at Transition Town Brixton are introducing their very own pound this September, and have a new website to promote it. Members of nef‘s Connected Economies team have acted as advisors on the project and Lambeth Savings & Credit Union (LSCU), a financial co-operative that has been serving Lambeth since 2006, are holding the Brixton Pound’s sterling backing.

Stopping the spread of Clone Town syndrome is particularly crucial for Brixton. It has plenty of independent retailers, but these are under threat from aggressive chain store expansion. Tesco already has a huge superstore just off the High Street and a Tesco Metro on the road up to Kennington, and yet it still has plans for expansion in Brixton, draining more customers away from local businesses. Earlier this year, Brixton’s vibrant market only narrowly avoided being turned into a yet another dull shopping precinct. Thanks to campaigning by Friends of Brixton Market, the planning application from developers London and Associated Properties (LAP) was rejected. Initiatives like the Brixton Pound will help to make this victory secure.

If you live in Lambeth – or even if you don’t – and want to support the scheme, you can pledge to buy ten Brixton Pounds (B£10) when the scheme goes live in September. Or, if you’re a business owner in Brixton, you can pledge to accept the currency from your customers.

And while I’ve got the attention of all you South Londoners, why not join Project Dirt?

Bookmark and ShareJosh Ryan-Collins is a researcher in the Connected Economies team at nef.

The UK is sliding deeper in to recession and it is becoming clear that the Government’s strategy of ploughing billions’ of pounds of tax-payers money in to rescuing the banks is not working. And as the UK’s debt increases, sterling’s volatility increases, with a recent recovery still leaving it historically weak against the pound and the Euro.

The Conservative’s solution to the sterling problem is for the government to commit to a more ‘fiscally responsible’ strategy, aka reductions in spending (and thus debt), to try and boost the confidence of investors. That’s not much use to the predicted 3 million people who will be facing unemployment by the end of the year. Will Hutton’s solution is to keep pumping money in to the economy whilst also joining the Euro, a currency big enough to mimic the dollar as a reserve currency and hence less likely to be subject to damaging currency speculation.

But abandoing the pound will weaken further the UK government’s control over monetary policy, as nef argued back in 2003 when the UK was last considering Euro-membership. Interest rates will be set by the European Central Bank and reflect the interests of the biggest economies in the Euro Zone, of which the UK is just one (and a shrinking one) amongst many.

Perhaps, instead, we should be considering diversifying rather than centralising our currency system. There are some parallels with the banks here. We now have four major banks, all of which have become ‘too big to fail’ as opposed to the rich patchwork of credit unions and building societies that were actually connected to and interested in local and regional economies. Maybe we also need to re-link our money system and currencies to local and regional economies, so that if the national (or even international) currency collapses, others will continue to enable people to conduct economic exchange.

30,000 Lewes Pounds have been issued since the Lewes Pound was launched in September 2008 and 130 traders have signed up to use the currency

30,000 Lewes Pounds have been issued since the Lewes Pound was launched in September 2008 and 130 traders have signed up to use the currency

This is exactly what happened in Argentina in 2000 when the government was forced to massively devalue the Peso, previously pegged at 1:1 with the dollar. As the national currency became virtually worthless in the space of a few weeks, municipal authorities across the country began issuing regional currencies to keep teachers and nurses and public sector workers in their jobs. Similarly, during the great depression in the US over 4000 local currencies had sprung up around the country before they were abolished by Roosevelt’s New Deal program.

Complementary currencies do not displace national currencies but serve different, but no less important functions. They encourage people to spend more money locally, thus supporting local independent businesses, as with the Transition Network ‘local pound’ currencies, pegged one to one with sterling, currently circulating in Lewes in Sussex and Totnes in Devon.   Such currencies should also stimulate local production of goods and make local food growing more appealing for example, thus reducing carbon emissions and shortening supply chains.  The Swiss WIR, one of the few complementary currencies that wasn’t squashed by Central Banks post-depression, has been circulating in Switzerland since the 1930s and is now used by 62,000 small and medium sized enterprises.  A recent academic study showed that it is ‘counter-cyclical’ – i.e. that it is used more when the economy slows.

And, as George Monbiot and The Economist have recently pointed out, there is no reason why money should only be created as interest-bearing debt by private banks. Complementary currencies can also carry a cost in holding on to them which would encourage people to spend money in to the economy rather than hoarding it. Experiments in Switzerland and Germany point to the potential of such ‘free money’ in stimulating economies at times of recession and depression.

More research is needed to better understand the potential of complementary currencies and what optimal currency zones might look like in order to create a more sustainable and resilient monetary system. But, as nef argued in From the Ashes of the Crash, government and local authorities should encourage experiments in complementary currency systems and move beyond the ‘one size fits all’ approach that doesn’t work for banks and doesn’t work for currencies.

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nef employees blog in their personal capacity. The opinions expressed here do not necessarily reflect those of the new economics foundation.