The Brixton Pound

From the Guardian:

Will the Brixton pound stick around?Brixton, like other ‘transition towns’, has its own currency. But, a year after its launch, is it more trouble than it’s worth?

Supporters of the Brixton pound (B£1 is equal to £1 sterling) use the slogan “money that sticks to Brixton”. They want to preserve the area’s unique identity, foster community spirit, strengthen local bonds, and defend local businesses from the onslaught of chain stores by paying for goods and services with the local money. They also want to cut down on food miles and would like their traders to source goods locally.

Steph Butcher, Brixton’s town centre director, describes the currency as “the single most important thing that has happened to Brixton in a long, long time in terms of economic development.” She says the council is trying to find a way to take the Brixton pounds in payment for bills.

Josh Ryan-Collins, a founder member of Transition Town Brixton and researcher on monetary reform for the New Economics Foundation (Nef) acknowledges the Brixton pound’s limitations.

“The main problem with the currency as it is at the moment is the transaction cost, [the effort involved] for the consumers, but more for the businesses because they can’t put it in the bank,” he says. But he defends the ethos of the project. “The challenge really is respending it within the community,” he says.

Ryan-Collins is working on a map of Brixton supply chains, and hopes to encourage local businesses to sell to each other. He also suggests that transition towns could trade with each other, “bread and herbs from Lewes could be traded for services from Brixton”.

For Ryan-Collins the main purpose is to democratise money. “We are trying to make people aware that money is something that we can actually try to take control of ourselves, we don’t have to leave it to the state.”

Ben Goldacre often compares solid and complicated economics coverage in the news to woefully credulous articles about revolutionary new age medicine, but there are some rather obvious questions unanswered in the article.
From the comments:

Currencies get their value when you can pay taxes and court judgements with them.

It seems you can’t do either with a Brixton Pound other than by exchanging it for a real one. How does this scheme benefit anyone?

This bit is especially problematic:

“Ryan-Collins… also suggests that transition towns could trade with each other, “bread and herbs from Lewes could be traded for services from Brixton”

Transition towns will find it easier to trade with each other using a common currency than two different ones. This seems to have all the costs of diverse currencies- exchange, transition, hassle, shoe-leather on the high street, with none of the benefits- independent interest rates and free-floating valuation.

And:

To get some B£ I have to buy them with sterling at a pegged rate from the council’s suppliers.

I can then spend them in a participating local shop, where I suppose it will force the shopkeeper to either spend them locally or face the hassle of taking them back to the council to be redeemed for sterling again.

I can see that this might push them to look locally but will that small incentive be worth the hassle?

Even if they do spend locally, what would they spend their B£s on? With what could you restock a shop spending only in Brixton?

Food isn’t grown there, magazines aren’t printed there, there are no factories. If you want money to be spent in your area, produce something.

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