Local Cash for Cities

As the current crisis lays bare certain deficiencies in the state’s social security blanket, mutual aid groups, neighborhoods, and municipalities are asking what they might do to meet citizens’ ever-growing needs. Particular media attention has been paid to cities: as heavily hit by the virus, highly socioeconomically and racially unequal sites of health outcomes, and key to turning the tide of the public health crisis.

These features are not unique to the unfolding of COVID-19—cities have always been hotbeds of infection during pandemics. Yet, their novelty as sites of action stems from their growing capacity to mobilize when state efforts prove ineffectual or insufficient, as evidenced by cities’ leadership on climate issues and through the proliferation of municipal networks like C40 and 100 Resilient Cities. This makes them prime staging grounds for ushering in a renewed, transformed economy.

Many municipalities have already committed to undertaking transformations to the way in which their economies function. Amsterdam will implement a ‘doughnut economics’ model as the basis of its policymaking, so that rather than prioritizing traditional metrics of city well-being like economic growth and profit, its decisions will be guided by targets to foster human and environmental well-being within the locality’s ecological limits.


The ‘Doughnut Model’ proposed by Economist Kate Raworth. Image: Kate Raworth and Christian Guthier/The Lancet Planetary Health

Local currencies have a role to play in such transformations. As democratized payment alternatives, alternative currencies support local businesses and bolster communities against globalizing trends which limit the circulation of money regionally. Alternative currencies, existing in multifarious forms in dozens of countries globally, vary widely in their principles, use, and scope. Some are expressly anti-globalization in nature, like the Brixton Pound and other currencies born out of the UK’s Transition Network movement. Others, like the Chiemgauer (native to the Bavaria region in Germany), emphasize the relationship between local currencies and reducing unemployment. Still others express environmental or cultural motivations, among others. The Schumacher Center maintains a directory of local currencies. 


Brixton Pound notes honor local figures; their designs are selected by popular vote.

In light of uncertainties about the stability of globalized supply chains whose interests lie far outside the bounds of local communities, municipalities are asking what they can do to reinforce regional economies by supporting local currencies. Historically, local currencies have emerged where societal needs for them emerged, thereby allowing communities to cope during crisis. During the Great Depression, the Austrian town of Wörgl turned to local currency with impressive success, as did the Grecian city of Volos during the country’s financial crisis, using an informal barter currency. In Mombasa, Kenya, slum inhabitants exchange Bangla-Pesas to smooth business volatility when local businesses face downturns.

Municipalities can apply the same logic to respond to the present crisis. They can do so by partnering with existing local currency systems or fostering the growth of new non-profit, regionally based, open-membership currencies.

In communities where local currencies already exist, municipalities can support their resiliency capacity by incorporating local currency into its budgetary functions. Examples of this include municipal payments for local services in the form of local currency or salary payments to employees in this form rather than using federal currency (the mayor of Geneva, Switzerland accepts part of their salary in the local currency, Lémans). Discretionary donations made by cities to community resource centers, volunteer organizations, or cultural organizations may be made in the form of local currency, as can payments for Requests for Proposals. Cities may borrow local currency and even make emergency payments in this form, as the city of Maricá is doing amidst the present crisis, above and beyond the payment sums being offered to citizens by the Brazilian government. In cities where local currency organizations are fledgling or do not yet exist, cities may even provide seed funding in support of their efforts.


Mumbuca notes, a local currency used in Maricá, Brazil.


Beyond budgetary support of existing local currencies, cities can also provide logistical and technical aid to alternative currency movements. Municipalities may engineer systems to permit citizens to pay city taxes or licensing payments in local currency to encourage its circulation. They may use their voice as a legitimate authority within a region to encourage participation among local businesses, provide information to citizens about the nuts and bolts of local currencies, or support local media coverage of the community’s efforts to develop such a currency. While they may in some cases provide technical assistance—by producing maps of participating small businesses or assisting with digitalization—they may also maintain a softer support role by facilitating introductions to community leaders throughout a region or advocating for larger-scale policy change in support of local currencies.

Today, municipalities are global players on an unprecedented scale—they are leaders in the governance of a plethora of ‘wicked problems’ ranging from climate change to crisis management. As such, the present moment is not merely one of problem-aversion—it is also charged with expansive potential to transform local economies. As ideas like import-substitution find their place in this moment, what could the impact of sustaining local economies through regional currencies be? Many countries’ federal currencies remain tied to their former colonizers, thereby perpetuating imperialist monetary control of local economies. The world over, local economies are made to suffer because money is siphoned from the communities where it is spent and subsequently funneled into capitalistic supply chains which benefit corporations, not communities. Municipal support of local currencies liberates local economies to transform themselves and foster a new economy during and after the present crisis.