How Local Currency Works: BerkShare Model

What’s Minted in Berkshire County Stays There.

On the Left Coast, many of us have moved our money to local banks and credit unions. Some of us also started using local currencies. As the video above attests, a local currency has many benefits—which are aligned with the progressive (and sometimes libertarian) cause.

While local currencies come in different flavors, only one of them is really a currency (with time banks, the unit of exchange is your hours, and with trade exchanges it’s your services). With the BerkShare Model for local currency, things get interesting.

The BerkShare Model at a Glance

BerkShares are used (widely and with great success) in Western Massachusetts. Some hallmarks:

  • No one has to sign up for anything. You can just use the money.
  • You can exchange the currency (for U.S. dollars) at local banks.
  • The whole system is transparent and democratically run at the community level.
  • The community defines the exchange rate. (BerkShares are pegged at 95 cents to the U.S. dollar, so you get a 5% discount with every local purchase.)
  • Loans to local businesses (in essence from local businesses to local businesses) can be issued in the local currency—at zero interest (since the currency isn’t issued by the Federal Reserve, the private bank that issues dollars).
  • It compliments the national currency and, once backed by itself, creates currency competition with a less inflationary dollar.
  • Last but not least, the beautiful printed money celebrates local heroes.

This begs the question: If Massachusetts can make BerkShares happen, why don’t we have something similar on the Left Coast? We have local currencies in a few places (Davis has Davis Dollars) but we don’t have anything working as robustly as BerkShares.

We’ve been busy transforming transactions. In recent years, the Left Coast has focused on transforming financial transactions with things like PayPal, Square, Google Wallet, Apple Pay, and Stripe. I was a big fan of Square in the early days, before it became clear (when Larry Summers joined the Board of Directors) that it would just be a new technological face on the same Wall Street system.

Imagine what we could achieve if we used our innovate Left Coast minds to make something as technologically elegant as Square or Stripe that was as beautifully progressive (transparent and democratic) as BerkShares?

I’ll leave it to you to figure out the details. I myself like to think about who might be on our printed currency? Perhaps…

  • Dorothea Lange
  • Robin Williams
  • Julia Morgan
  • Steve Jobs
  • Beverly Cleary
  • Chief Seattle
  • Jimi Hendrix

Deeper Dive

If you’re interested in taking a slightly deeper dive into this area, take a look at these interviews from a local currency conference.

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