I’m a pretty jaded news-browser, but this USA Today headline got my attention: Communities print their own currency to keep cash flowing.
Yes, in the United States.
It sounds a bit dubious in concept, but the practice is sound:
The systems generally work like this: Businesses and individuals form a network to print currency. Shoppers buy it at a discount — say, 95 cents for $1 value — and spend the full value at stores that accept the currency.
In the BerkShares system, residents can buy the local currency directly at the bank. Effectively, entire communities are locking into the same Gift Certificate system, and using that purchasing leverage to slightly lower prices across the board. It’s safer than buying gift certificates to a single store, as many Circuit City customers discovered earlier this year.
The missing element in the article is … who manages the cash? Are banks holding it in escrow until the money is spent at stores, and then reimbursing store owners who submit used bucks? And, what happens if a resident buys in and then wants to buy back out – do the local dollars exchange back to cash at the same rate they were bought?
Also, I’m interested in the counterfeit angle. Real money is one thing, but what could these local currencies possibly be printed on that’s safe from duplication? I’m sure the things can’t be photocopied – it’s easy enough to buy coded or watermarked stock – but what about bootleg versions? All it would take is a designer with a keen eye and a closet full of paper catalogs. Even a complex serial-numbering system wouldn’t help detect fakes at the register.
I’d love to get my hands on a piece and see if the designers at work could comp one that would pass muster.
HuffPost has some further coverage, and is seeking additional examples from readers.
Editor’s Note: Check out the comments for detailed answer from Mark Herpel from Community Currency Magazine. Note that the BerkShares system is using AB Craine, which supplies the US Mint. I’m sure other community cash programs – like the one in Detroit – might not have such high-end business partners.