The Proposed Local Currency for Cork
Local currencies for specific localities is not a new concept — in 1919 the city of Limerick adopted their own currency; the infamous Limerick Soviet.
Written by Graham de Barra
With the recent surge of COVID19 related cases in the Republic of Ireland, there have been some innovative responses and acts of kindness led by local citizens. It was featured on RTE Radio One recently that a business up the country are accepting anonymous donations from customers who are offering to pay the bill for the next customer after them. This advanced payment allows some additional cash-flow for the business to help keep them afloat during turbulent times and undoubtedly raises the spirits of its loyal customer base. Like the Olympic torch, this reward gets passed around the community — and the best part is it reinforces a circular economy for the locality which is maintained without the reward ever getting snatched up by any external forces. But before we say goodbye to off-shore payment processors we need to consider how such innovations can scale for larger transactions in order for it to become a viable alternative. Such is one proposal by Cork City Cllr. Colette Finn with Cork Coin.
Ok, Cork Coin is a made up name for this initiative but it is one that has stuck among the Twitter community. I prefer an alternative name like Cork Cash.
When first approaching this thought experiment it is imperative to understand the nature of money and it’s intent. Currency denotes value and a consensus among a population over what this value is worth. One Bottle of Milk does not always equal 1 unit of currency. In fact, the purchasing power of the EURO currency has been on the decline since it’s inception. So a Bottle of Milk will always cost more Euro units in the future — through a process called inflation.
Right, well why would we keep our savings in EURO if it declines in value? No smart person would, which is why there exists gold and other precious metals that provide a stronger store of value in the long-term. The strength of an economy could be viewed by how much gold the average citizen owns which is a tactic imposed by countries such as India where households currently hold 25,000 tonnes of it. If this was a game of Civ you would be very close to victory with such a large stockpile of Gold hoarded in your treasury.
Gold-backed currencies went out with the 20’s and since then money is created out of debt. It is to inject funds into productivity with the prediction that productivity brings growth and growth brings employment. Employment means high standards of health as people can afford food. The right allocation of money can also mean better education if your politicians invest it wisely instead of the cuffs of their own black suit. So there comes the problem of corruption — how is this currency governed and who decides how it is allocated?
The Bitcoin Whitepaper was released open source to the public on the 2nd of January 2009 as a response to the Global banking collapse, under the pseudonym Satoshi Nakamoto. Far detached from the democratic processes of Parliaments and the Electorate this anonymous person or persons launched a digital currency with a pre-determined ruleset that cannot be adjusted. This Consensus algorithm is maintained and verified by computers operating a Bitcoin Core node. Transactions are confirmed using mining equipment which solves equations to produce blocks which contains newly minted Bitcoin. This is very relevant in the context of Cork Cash as earlier this week the 4-year “Bitcoin Halving” event took place, which reduced the amount of newly minted Bitcoin into the economy by half. This is a rule that will always follow until all 21 Million Bitcoin is mined. This makes Bitcoin “Bailout-free” from it’s design.
This begs the question, who would operate Cork Cash? Who determines it’s inflation rate? Does each citizen in Cork get airdropped Cork Cash like the Covid grant? Why would a business be given an incentive to accept this new currency?
These are civil and political questions as much as they are economic. Take the historical example of the series of Soviet currencies that were launched across communities in Ireland in 1919 including the Limerick Soviet declared by citizens in the City of Limerick as part of a strike action in opposition to British Military Occupation in taking ownership over their own food supply and print media. Afterall, the collapse of government can occur with just a few % of the population refuting it’s authority and boycotting the collection of tax. Printing your own money is certainly taking this notion a step further, and it would be difficult to separate the actions of the Labour Movement of the time within the context of the Irish Revolution. The Saorstát Pound was eventually adopted as the national currency of Ireland in 1928.
In 2020 we face challenges of a different kind. This occupation comes in the form of COVID19 Corona Virus which indiscriminately uses humans as it’s host to spread, causing the collapse of the retail industry. Colette Finn’s proposal needs to be taken into context under the current Depression (not just a simple recession) and has the potential to be a truly innovative solution over how a community governs itself during mass unemployment and supply chain shortages. The response from Cork City Council was perhaps too dismissive, saying that it takes 3 years to resolve the questions set forth by such an initiative.
I do wonder, what the world’s economy would have been if we had left Bitcoin in the hands of Government. It may have become yet another great idea, washed down to the common denominator of the room and unfaithfully reversed like Obama Care in the US or our very own Action Plan on Housing and Homelessness. Still, there is hope that the courage once demonstrated by our Ancestors will become reignited during contemporary challenges and local community can take governance over local problems into it’s own hands with some help of 21st Century Technology, in the context of COVID19.
