‘Can local money save Bristol, and the planet?’

We are used to the idea that we can buy anything from anywhere nowadays. Sitting on your sofa, you can use some sort of e-payment system to get a product delivered from the other side of the world.

Yet if we think about money, most of us probably still imagine cash, stuffed into pockets and purses and handed from one person to another. The disconnect between virtual payment and coins seems almost complete. Ask anyone selling The Big Issue.

The launch of the paper-based Bristol Pound in 2012 was based on the idea that local money could be physically spent in a local business. Its digital version used Bristol Credit Union accounts to simulate e-payment. In 2021, the Bristol Pound is becoming Bristol Pay, a virtual payment system that is designed to produce local benefits and in a sense behave more like cash. But will it work?

The Belgian radical economist Bernard Lietaer suggested that the ‘money system’ is a way of ‘programming’ the invisible hand of the market. That’s to say, if we design money systems differently, then we can achieve different ends. We don’t have to assume that national money systems are the best solution to the problems that face us and could instead programme money to achieve the ends we want.

Having a national currency is very helpful if we want to ensure that all commodities and services have equivalent values within a given territory. Scottish potatoes and Somerset cider can be made easily tradable by having sterling prices attached to them. But what if we want to use our spending to localise the economy? Or if we wish to encourage businesses that pay the living wage, or are actively committed to reducing carbon?

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Read more: No more Bristol Pound as partnership sees launch of new platform

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The Bristol Pound was an attempt to build a money system for the city that encouraged certain sorts of spending, that programmed transactions that benefited smaller businesses, and companies that were prepared to commit to local supply chains.

The problem was that it was launched just at the point when payment was going virtual, so however beautiful the notes were, they were more likely to be souvenirs than currency. In addition, it never had the marketing and business model to allow it to operate at the sorts of scale which would really tilt the city’s economy.

Current systems of e-payment are profit-making technologies based on extracting value from any transaction and are indifferent to the nature of the organisation that we are spending money with. Mastercard, for example, makes money whoever you spend with, and it has been estimated that something like £60m in transaction charges leaves the city every year. So why not build a form of payment which keeps that cash in the city, benefitting local companies and producing other positive effects?

Money is just a form of exchange after all, and if we want to lower carbon emissions by shortening supply chains, encourage BAME-owned businesses, or spend with co-ops and not corporations, then it would be easier to do this with a widely available local payment card.

Not everything can be local, which is why we will also need national money, but we can do a lot more to cut the carbon costs of transportation, as well as supporting local jobs. Let’s programme the money system that will help us produce a more resilient and diverse low carbon economy, and not assume that Amazon, Google or Apple will do that for us.

Martin Parker argues that the city needs its own payment system – photo courtesy of Martin Parker

Martin Parker is a professor at the University of Bristol and lead for the Bristol Inclusive Economy Initiative

Read more: ‘We need to have a different way of doing business, a new economy’