Wednesday 19th September 2012 was a landmark day for the city of Bristol; the day that the city launched its very own currency: the Bristol Pound. Driven by the economic turmoil throughout Europe in recent years and in a bid to support Bristol’s local businesses and traders the evolution of the Bristol Pound is the culmination of three years’ research and development. The idea of an independent local currency is not new; similar schemes have been relatively successful in the United States and in Germany but a previous attempt in Britain, launched by the city of Stroud in Gloucestershire in 2009 has not fared particularly well with many independent shopkeepers regarding the Stroud Pound as little more than an accounting inconvenience.
The rationale behind the Bristol Pound
The Bristol Pound is a local currency of equal value to Sterling (i.e. one Bristol Pound is of equal value to One Pound Sterling) but is not affiliated to or recognised by the Bank of England. The reasoning behind local currencies such as the Bristol Pound is that they can only be used within a restricted locality and with independent businesses that have agreed to accept that currency as payment. Whilst this means that the Bristol Pound can’t – currently at least – be used to pay for goods and services nationally operating brands such as supermarket chains or car rental companies, smaller local businesses should see the benefit.
Optimism for the success of the Bristol Pound is running high – prior to the launch day, upwards of three hundred local businesses had agreed to support the currency. Ciaran Mundy, Director of the Bristol and Bath Local Currency Scheme Community Interest Company, further explains the rationale behind the adoption of the Bristol Pound:
«If you lock the money into the area, rather than it going into the international finance system then you keep more money actually working in the city here.»
In practice, local businesses will incur a 3% fee for converting the Bristol Pound back to Sterling which means that it will be more cost-effective for business owners to trade with other suppliers that deal in the Bristol Pound thus ensuring that money and trade remains within the local economy.
Why would consumers use the Bristol Pound in preference to Sterling?
Perhaps the pertinent question is why wouldn’t Bristolians adopt their new independent currency? Many local shopkeepers report that customers have asked whether they will accept the new currency and interest within the community seems high. The Bristolian Pound is not exclusive and will be accepted alongside Sterling, and is a system of paper banknotes which is no more difficult to understand or use than the national currency. However, there is a significant incentive for consumers who open a Bristol Pound account with the Bristol Credit Union (the Bristol Pound is not accepted by high street banks). Amounts deposited up to a maximum of £100,000 Sterling will attract an extra 5% bonus when converted to Bristol Pounds i.e. each Pound Sterling deposited will be worth £1.05 Bristol Pounds.
The Bristol Pound: aiming to succeed where similar schemes have failed
At face value, it seems as though the businesses of Bristol will be vindicated in their decision to develop their own currency; the initial adoption by local independent retailers is widespread throughout the region and consumer interest and confidence in the scheme seems high. But the Bristol Pound has a number of other tricks up its sleeve which differentiate it from the local currencies that have gone before it. Firstly, 70% of Bristol’s retailers are independent and cover a broad diversity of business sectors. Secondly, the Bristol Pound can be used for fast and straightforward online purchases and even for purchases made via mobile phone, where other local currencies demanded that purchases were made in person. Lastly, the involvement of the Bristol Credit Union provides a degree of financial security and risk management for adopters of the Bristol Pound.
These innovations suggest that the time and effort spent in researching and developing Bristol’s own independent currency may have been worthwhile in aiming to ensure that the Bristol Pound fares better than its predecessors, but as the precarious nature of financial markets both large and small has shown in recent years only time will tell whether the Bristol Pound will succeed in its goal of effectively stimulating the local economy.
This article is written by John who is a feature writer from National car hire in Bristol.Image: The 5 Bristol Pound note by Samantha_Bell via Flickr