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Join the discussion about the potential for local currency and investment systems on Kaua`i!
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Maui Weekly
Thursday, February 28, 2008
Making Money Local
By Subashini Ganesan
I have always been fascinated by “local currencies”—money that is unique to a community or legal tender that is only used in transactions between residents, community businesses and employers within a designated geographical boundary (often a city). This fascination re-emerged as I have been encountering more discussion amongst several cities around the United States to make local currencies a reality in their communities. Of course, that got me thinking—how would that system work in Maui?
Many cities call their currency the “hours” system, giving dollar values for each “hour.” For example, each RiverHOUR (Hood River, Oregon) is equivalent to $10. Other cities have opted to have different denominations ($1, $5) in city currency. Before we go further in this discussion, I want to clarify the biggest concern that many people might have—it is legal to create local currency as long as:
It is created and distributed by a citizens group that has a recognized board of directors, by-laws that comply with federal and state laws, and a clear strategic plan;
There are no coins in circulation;
We pay taxes on local currency just as we would federal money.
Here are some basics about local currencies:
The first hours-based currency system was created in 1991 in Ithaca, New York. It now has over 2,000 individual and 300 business participants, has an equivalent of about $70,000 in circulation, and about $2 million in transactions have been generated to date.
Almost a dozen cities in California, New York, Oregon and Wisconsin have organized, implemented and enjoyed a successful local currency program.
Some sophisticated programs like BerkShares and IthacaHours help businesses secure zero percent interest improvement loans or mortgage-related transactions.
Let’s postulate that Maui citizens create a co-operative to introduce “DakineHours” as the local Maui currency. After becoming incorporated as a nonprofit organization, this organization will work to create buy-in from three major components of our community:
Locally owned businesses who will accept and circulate “DakineHours.”
Locally operating employers who would pay a portion of their employee checks in “DakineHours.”
And most importantly, train Maui residents to trade in local currency.
For more information, visit www.smallisbeautiful.org/local_currencies/articles.html.
Once businesses and employers are ready to get on board, each company would pay (in federal dollars) to become members, and in return, will receive four “DakineHours,” marketing materials that they can display (to show that they support local economy)—and we are literally in business. Local residents can initially buy “DakineHours” from the local currency organization (sort of like getting cash from the bank, but in this case, with no obligation to have an account). The intent will be to implement trading in “DakineHours” so that it will be in circulation quickly, efficiently, and begin positively impacting our community.
How is local currency usage advantageous? This concept is explained very clearly on Hood River’s local currency Website (http://riverhours.org).
Local currencies:
Can only be spent on goods and services locally, so the purchasing power stays within the community and boosts the local economy;
Create opportunities for people who have skills to trade but are not employed in the current job market;
Create opportunities for people to earn income doing the things they really enjoy;
Bring publicity and tourism to the regions using them, and thereby, more “regular” federal money;
Cannot be hoarded in a savings account, so they always encourage local spending of both federal dollars and the local currency.
Build and strengthen community relationships and self-reliance.
So, for example, you pay for your massage using three “DakineHours.” Then your massage therapist uses two “DakineHours” to pay for his yoga class. The yoga studio, in turn, pays their employees partially in local currency, paying out four “DakineHours” every bi-weekly payroll... you get the idea.
Local currency is really a way to trade services with the flexibility of using the “traded” commodity for various purposes. In a community like Maui, where we have a population of skilled residents who struggle to live in the present monetary system, a local currency system could be a great contribution to improving the lives of many islanders.
If I managed to get you excited about this project, then let’s keep working toward a more local, sustainable and prosperous island life!
Subashini Ganesan organizes, researches, writes and implements efforts to create social and environmental change. She is a part-time resident of Maui and can be reached at subashinig@gmail.com.