The Bristol Pound to be Britain’s newest local currency

A number of UK towns have launched their own currencies in a bid to support local firms. The latest, the Bristol Pound, will start operating in May 2012.

The purpose of these local currencies is to keep cash in the area, and with local businesses, rather than see it siphoned off by national or multinational firms. The Bristol pound’s smart new website announces that the new currency ‘is designed to support independent businesses in and around Bristol’.

The first local currency in recent times was the Totnes Pound, which began in 2007. This is accepted by about 50 firms and organisations in and around the Devon market town, some of whom offer small discounts when payments are made in the local money.

How a local currency works

The Bristol Pound, in line with similar community schemes, simply replaces pounds sterling on a one-for-one basis. This keeps the maths simple as there are no exchange rates to work out.

Getting hold of the money varies from place to place. In Totnes, where the scheme is operated by volunteers, people can choose to swap sterling for local pounds in a number of different shops. They can then spend the money in other local shops. It’s mainly a way of giving community support to businesses based in the area.

All local currencies begin in traditional form, using notes. The Brixton Pound, which has been running for a couple of years, is about to launch an electronic version that can be used on mobile phones. The Bristol Pound will also exist in electronic form, and businesses will have the added advantage of being able to use it to pay rates to Bristol City Council.

What is the point of a local currency?

The UK’s local currencies, which also include the Stroud Pound (Gloucestershire) and the Lewes Pound (East Sussex), are always set up in a bid to boost the local economy. The thinking is that by having a currency which is only valid in the area, it’s more likely that people will spend their money in local businesses.

The publicity that goes alongside the set-up and operation of a local version of the pound also helps raise awareness of smaller businesses, and encourages people to spend with them rather than national firms.

The success of the Bristol Pound, and its contribution to the local economy, will depend on the extent to which it is taken up by local traders and firms, and the willingness of the community to carry the new notes in their wallets.