LOCAL CURRENCIES PROGRAM
Regional currencies represent a democratization of currency issue, supporting local businesses and educating consumers about how their money circulates in the local economy. These currencies serve as tools to keep local money local: money spent within a specific community stays in that community, where the money can directly benefit community members.
Originally published on centerforneweconomics.org
Commonplace during the early 1900s, local currencies are once again being recognized as a tool for sustainable economic development. Local currencies make a distinction between businesses that accept the currency from those that do not, fostering stronger relationships between the responsible business community and the citizens of the region. The people who choose to use the currency make a conscious commitment to buy local, and in doing so take a personal interest in the health and well-being of their community by laying the foundation for a truly vibrant, thriving economy.
In Robert Swann’s 1984 essay The Role of Local Currency in Regional Economic Development, he explains that:
Much of this tendency for money to leave the rural areas and be sucked into urban financial centers results from the centralization of banking, which took place in the early part of this century under the Federal Reserve Act of 1913 and the pressure of World War I. Previous to 1913, local banks created their own funds based on their gold reserves. They were not dependent on the Federal Reserve Board to control reserve requirements-the amount of credit or money available within local regions. During the early part of the nineteenth century, this fact played a very important role in the rapid development of the U.S.
In the early 1970’s, Schumacher Center founder Robert Swann worked with Ralph Borsodi to issue Constants, a commodity-backed currency, on an experimental basis in Exeter, New Hampshire. The creation, circulation, and result of the Exeter Experiment is detailed in Inflation and The Coming Keynesian Catastrophe: The Story of the Exeter Experiment With Constants.
The Schumacher Center furthered that work in the Berkshires with development of SHARE Micro-credit program, Deli Dollars, Berkshire Farm Preserve Notes, and BerkShares (see below). The theory, history, and practice of the Schumacher Center for New Economics’ work with local currencies is detailed in Democratizing Monetary Issue: Vision and Implementation in the Berkshire Region of the U.S. by Susan Witt.
BerkShares are a local currency for the Berkshire region of Massachusetts. Dubbed a “great economic experiment” by the New York Times, BerkShares are a tool for community empowerment, enabling merchants and consumers to plant the seeds for an alternative economic future for their communities. In 2006 the Schumacher Center for a New Economics worked with businesses, banks, and private citizens in its home region of the Berkshires to incorporate BerkShares, Inc. Organized as a non-profit corporation with membership open to anyone in the region, the board of directors is elected by members at an annual meeting. BerkShares, Inc. designed and printed BerkShare notes (B$), which feature local heroes and the works of local artists.
Over 10 million B$ have gone out in circulation between 2006 and mid 2019 in a region of 21,000 residents. Approximately 140,000 B$ are circulating at any one time. BerkShares are exchanged for federal currency at 16 branches of four local participating banks and spent at 400 locally owned participating businesses.
In its present form, BerkShares local currency is a sophisticated buy-local program, distinguishing local businesses from their global counterparts and building pride in Berkshire sourced goods and services. In the future, in addition to exchanging federal dollars directly for B$, the local currency will be placed in circulation through the making of productive loans. The loans will be required to meet the social and ecological criteria of BerkShares, Inc. as well as the financial criteria of the participating banks.
BerkShares are a local currency for the Berkshire region of Massachusetts. Dubbed a “great economic experiment” by the New York Times, BerkShares are a tool for community empowerment, enabling merchants and consumers to plant the seeds for an alternative economic future for their communities. In 2006 the Schumacher Center for a New Economics worked with businesses, banks, and private citizens in its home region of the Berkshires to incorporate BerkShares, Inc. Organized as a non-profit corporation with membership open to anyone in the region, the board of directors is elected by members at an annual meeting. BerkShares, Inc. designed and printed BerkShare notes (B$), which feature local heroes and the works of local artists.
Over 10 million B$ have gone out in circulation between 2006 and mid 2019 in a region of 21,000 residents. Approximately 140,000 B$ are circulating at any one time. BerkShares are exchanged for federal currency at 16 branches of four local participating banks and spent at 400 locally owned participating businesses.
In its present form, BerkShares local currency is a sophisticated buy-local program, distinguishing local businesses from their global counterparts and building pride in Berkshire sourced goods and services. In the future, in addition to exchanging federal dollars directly for B$, the local currency will be placed in circulation through the making of productive loans. The loans will be required to meet the social and ecological criteria of BerkShares, Inc. as well as the financial criteria of the participating banks.
Anyone in the Berkshire Region may spend BerkShares or accept BerkShares for payment. BerkShares can be obtained at participating bank branches in exchange for U.S. dollars at a rate of 95 cents per BerkShare. These federal dollars remain on deposit at the BerkShares Exchange Banks in order to allow citizens to redeem BerkShares for dollars at the same exchange rate. For example, 95 dollars yield 100 BerkShares and 100 BerkShares yield 95 dollars. BerkShares can be spent at face value to pay for the goods or services offered by participating businesses—for example, 10 BerkShares can be used for a $10 purchase. This face-value spending provides the consumer with a 5% discount when making purchases with BerkShares, while also serving as encouragement for businesses to continue circulating the currency: the business faces a 5% loss in revenue when exchanging back to federal dollars.
There are 400 businesses in the Berkshire region that accept BerkShares. Use the BerkShares, Inc. interactive directory to explore where to spend your BerkShares. Learn more about using BerkShares, and discover what local banks are currently exchanging BerkShares.
Deli Dollars were issued by deli owner Frank Tortoriello to finance the move of his business from one location to another. Berkshire Farm Preserve Notes were jointly issued by two Great Barrington farms, The Corn Crib and Taft Farm, to finance start-up in the spring, and could be redeemed once produce was ready to be harvested. “Berk-shares” were issued by merchants in downtown Great Barrington to reward customers for shopping in locally owned stores. To learn more, read Susan Witt’s essay Democratizing Monetary Issue: Vision and Implementation in the Berkshire Region of the U.S.
