Local currency — a way to rebuild trust between agents
A currency is first and foremost an institution before it is a tool. That is why a currency can strengthen social bonds while money can unravel them.
Following the financial crash, the Euro is perceived as an asset for speculation responsible for social regression and loss of confidence. Therefore an alternative solution has been developed with local currencies changing the way we consume and to some extent many merchants’ business models as well. Since 2008, thirty local currencies have emerged in France alone.
Clayton (2010) defines the local currency as a reinvention of local banking which can play a positive but transitional role in improving social cohesion and thereby can encourage economic regeneration.
Is it all worth it?
In comparison with the Euro and its ease of use, a local currency means you have to have a second currency in your wallet that can only circulate between a small number of people, and concerns only “ethical” goods and services. The goal is to relocate the economy and finance local projects, thus transferring the bank’s commissions to associations. Consequently, the act of purchasing becomes a mindful choice.
Local currencies influence consumers’ habits: the definition of consumers’ economic interest is changing. For its users, a local currency is a way to participate in the development of their local economy.
Shortening the economic system, promoting local benefits and strengthening social bonds
A new consumer culture is emerging that is more focused on social utility and promotes regional identity as a reaffirmation of territory. It is the case with the “Eusko” in the Basque Country, which was launched in 2013 to promote the Basque language. Today, it is one of the most important local currencies in France with 550 partner companies and more than 370,000 Euskos in circulation.
The main objective of these alternative currencies is to reinvigorate local economies and add human and social values.
Most of the time, a community of citizens decide with a network of partners — merchants, craftsmen, companies, associations, communities — to initiate a complementary local currency on a defined territory. Their objectives are defined in a charter. The currency is accepted as a means of payment in the providers’ network. With any bank, it is possible to convert Euros (1 for 1) at a terminal that will allow the membership card to be filled, or to exchange cash money. The reverse operation is also achievable via the same terminal.
Some currencies are said to be “melting”. Their objective is to facilitate the ongoing circulation of currency, as the money must be spent within a determined time frame or lose its value.
Digital cards, text messages or Internet-based: future local currencies will no longer have to be fiduciary to avoid the risks of trafficking and forgery.
A second novelty will be the ability for people to pay for public services. These innovating trends can be illustrated by the project “SoNantes” that allows online local currency payment for some public activities. (“The SoNantes is an all-digital currency aimed at economic development of local businesses”.)
Rebuilding and strengthening trust between agents
The experience of successful projects suggests that local currencies may be considered as “a way to increase local economic activity, promote self-help, increase social interaction and thereby rebuild trust” (Clayton, 2010).
With this example, we want to show that when people act within a defined perimeter with complementary goals and interests and following similar beliefs, strong bonds can be forged, and trust may emerge between agents, as opposed to suspicion and wariness. They may help each other achieve personal and common goals. It appears that this type of interactions between people within a group is essentially based on trust and making control easier. It is also conducive to a better work environment.
Elise DAVTIAN & Clémence GUÉDY