Might a local currency be in our future?

I just heard from Ingrid Ault, the Executive Director of Think Local First, that her organization has been awarded a $5,000 grant from the Ann Arbor Downtown Development Authority to study the feasibility of a local currency here in the Ypsi-Arbor area. And, as it’s something we’ve discussed passionately here in the past, I thought that I should mention it… Following are the three questions Ingird and her folks have been charged with answering.

1) Would the Washtenaw County community embrace a local currency?

2) If yes, what local currency model would the community like to see put into place?

3) Would the new currency system encourage community members to support local independently owned businesses at a higher rate?

And, toward that end, they’ll be hosting three public meetings in order to present the models that they’ve identified (including those employed in the BerkShares and Ithaca Hours programs), and solicit community feedback. According to Ingrid, “The meeting format will allow participants to view informational materials at their leisure, ask questions, and finally to cast a ballot for the option that they feel best meets the needs of the community.”

Here’s the meeting schedule:

• Tuesday February 23, 2010 at the downtown branch of the Ann Arbor District Library in the lower lever multi-purpose room (343 South Fifth Ave, Ann Arbor)

• Thursday February 25, 2010 at the Ypsilanti Senior Center (1015 North Congress, Ypsilanti)

• Wednesday March 3, 2010 at the Vitosha Guest Haus Inn (1917 Washtenaw Avenue, Ann Arbor)

All meetings are open to the public and will run between 6:00 PM and 8:00 PM.

And, if you’re interested in this subject, please come back to the site in a week or so, when I hope to have an interview with Ingrid on the various options on the table, next steps, etc.

This entry was posted in Ann Arbor, Economics, Locally Owned Business, Special Projects, Ypsilanti and tagged , , , , , . Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.


  1. Posted February 15, 2010 at 11:16 pm | Permalink

    Ingrid also has a short segment running on Comcast channel 17 (community network television) running for the next two weeks. IT’s presently scheduled to run: Sunday (2/21) at 5:07 PM, Monday (2/15, 22) at 6:37 PM, Tuesday (2/16, 22) at 11:37 AM and 9:37 PM, Wednesday (2/17, 23) at 10:37AM and 6:07 PM, Thursday (2/18, 24) at 7:37 PM, Friday (2/19, 25) at 12:37 PM and Saturday (2/20, 26) at 3:37 PM.

  2. Dan
    Posted February 16, 2010 at 8:44 am | Permalink

    Don’t forget Traverse City’s Bay Bucks, http://www.baybucks.org/ .

  3. Posted February 16, 2010 at 9:13 am | Permalink

    Speaking of currency…I wonder how much money The Love Hangover, last night at The Elbow Room, raised for 826Michigan?

  4. Edwardo
    Posted February 16, 2010 at 9:30 am | Permalink

    Just imagine how cool it would be if the Elbow Room could start paying musicians in local currency.

  5. Kim
    Posted February 16, 2010 at 9:37 am | Permalink

    If I’m not mistaken, Berkshares are issued by a local bank, which adds to their credibility. Whatever we decide on, I think it’s imperative that it comes off as professional. I don’t think we’ll get widespread use with photocopied bills.

  6. Kevin P
    Posted February 16, 2010 at 9:40 am | Permalink

    And, it’s a great first step toward declaring independence from the United States.

  7. Estrus
    Posted February 16, 2010 at 10:55 am | Permalink

    I don’t know if there’s an easy way to accomplish this, but it would be great if there was a way to track how these dollars circulate through the community. If you could show how a dollar travels through a number of local businesses, I think it would be incredibly valuable. To do such tracking on a big scale, though, you’d need individually bar-coded bills and special readers at every cash register.

  8. Posted February 16, 2010 at 11:27 am | Permalink

    Love this idea!! I am too hyperactive for most meetings but I will drag my hyper butt down there, especially to the one at the Vitosha Guest Haus Inn…that just sounds like a cool place.

  9. Karl
    Posted February 16, 2010 at 3:38 pm | Permalink

    I’m curious as to how well the “work based” ones do over time. I imagine there might be a great amount of interest early on, but I’m wondering if it’s sustained. I haven’t, for instance, heard anything about Ithaca Hours in years.

  10. Posted February 16, 2010 at 4:31 pm | Permalink


    Completely web and mobile based. Is like a craigslist classified without the spam and paypal without the fees. Completely free. Washtenaw County members that list goods and services on the local exchange are advanced the exchange currency so that they can immediately transact.

  11. Posted February 16, 2010 at 4:34 pm | Permalink

    I would advise against printing a currency. A transparent web based accounting system avoids the problems resulting from secret hoarding, counterfeiting, printing and management fees. Since all members have access and can observe the balance of each other members account and all transactions between members, the level of trust is enhanced and all benefit equally from the open sharing of information concerning macro-economic activity.

  12. Posted February 16, 2010 at 4:42 pm | Permalink

    I solicited and established a community-exchange.org account last year for Ann Arbor / Washtenaw County. Internationally and nationally, the number of exchanges have grown.

    Locally, I set up a LETS Meetup. My company A2 Global Shipping is now available to offer services, some for 100% local exchange currency and others for up to 50% local exchange currency. The prescient need is for other businesses like myself who have excess capacity to list such services on the exchange and begin spending the currency account that they are advanced for having agreed to list their items and services on the exchange.

    The other lesson learned is that you cannot expect people/business to “buy in” to the exchange with US Dollars. They need an exchange or local currency because they are short on Dollars and long on excess capacity of goods and services.

    Another variant of this lesson is that you don’t approach prospective members with the term “loan” as in loaning them the money to open an account like you would with a credit card. People these days are just uncomfortable with the concept of credit even when no interest is involved.

    Ann Arbor Small Business Exchange will credit your account – give your business a positive balance so that you can start spending, for your investment of time to post excess goods and services that you will provide other members. This is how we create “the money supply” that is the means by which we exchange goods and services with each other.

  13. Posted February 16, 2010 at 4:48 pm | Permalink

    I surveyed a number of systems including Ithaca, Berkshire and Cyclos LETS systems. http://community-exchange.org is a web based Cyclos. The advantages I saw in community-exchange.org was that there was NO COST, the user and admin interfaces are straightforward, the host admins out of New Zealand were great to work with, and other users recommended it. It also had/has mobile capacity, so that you can be at the farmers market and send money to the vendor from your phone to theirs, right there as simple as an email.

  14. Joe Cooter
    Posted February 16, 2010 at 4:51 pm | Permalink

    Will the local currency be backed by gold? That would make Black Jake happy.

  15. Posted February 16, 2010 at 4:53 pm | Permalink

    Traverse City Bay Bucks developed a bottleneck in that they had one large coop that was accepting and had not developed enough other businesses that would accept the currency. I think this was in part because they were not a web based system where users were able to as easily as craigslist, add their inventory and services and advertise the system to prospective small business members.

    The key to the system will be encouraging a diverse base of small business that are already providing services for which there will be a demand. Conversely, if you lack that diversity – imagine a system with 10 massage therapists – how are you go to have any economic activity. To start off, you need 1 massage therapist and a dozen other different small business, some of whom will want massages and all of whom will be offering things needed by the other 12 members.

  16. Posted February 16, 2010 at 6:45 pm | Permalink

    It seems to me the fastest/easiest way to get a local currency up and running is to use something already in circulation. (Like dollar bills. j/k.)

    The past two years, I’ve made some attempts to pay various downtown businesses in the $1 Market tokens that Growing Hope provides for credit card users at the downtown Farmers’ Market. So far, no takers, even though they’re drawn on actual money, via credit cards that have been run at the Food Coop stall at the Market. (I don’t know that the Coop will give you cash for them, but you can at least convert them into cold hard vegetables if you want to liquidate But this is an added bonus, from a local economy standpoint, as it guarantees that even cashing out is only possible through purchase of local goods.)

    One big problem I’ve seen with local currencies is overthinking it. By example, there was an attempt a few years back to set up an Ypsi local currency (“Tower Hours”, I think) that seemed to get bogged down in minutiae of designing the currency, preventing counterfeiting, etc., and never actually launched.

    I don’t think there’s any way to prevent counterfeiting by the truly motivated, except through trust networks – dollars may be legal tender for all debts, public and private, but that doesn’t mean that a local currency has to follow suit. I would be perfectly happy with a system in which Beezy’s, Bombadill’s, The Rocket, and the Food Coop let me pay in local currency, because the employees know me personally and know I’m unlikely to rip them off, but the Deja Vu required me to pay in US dollar bills, because I’m not a regular and they don’t have any reason to trust me. (This all requires two layers of trust, really: you have to trust the people you’re dealing with not to intentionally rip you off, but you also have to trust their judgment – that they’re only dealing with people they trust, and therefore aren’t unwittingly passing you a bad Local Buck.)

    If our expectation is a system in which fraud is impossible, and anyone is willing to accept a Local Buck from anyone else as a result, we will fail – either we will never get off the ground because of the intractable design problem (like Tower Hours), or we will launch with an incorrect expectation of fraud-proofness, and have the system eventually collapse under a devalued local currency.

    (The other option, of course, is a purely electronic system, in which folks are transferring currency on some server via their cellphones, with a public key authentication system or similar, but this still involves setting up a trust network – do you trust the software? – and is just a lot more work than the in-person trust.)

    So I’ve thought about this before…

  17. Peter Larson
    Posted February 16, 2010 at 7:07 pm | Permalink

    Traverse City has one. BayBucks.

  18. Peter Larson
    Posted February 16, 2010 at 7:07 pm | Permalink

    Oh somebody already said it. Sorry.

  19. Posted February 16, 2010 at 9:28 pm | Permalink

    When your scrip goes bad, you’ll line up and sell yourselves to me for my wampum.

  20. Posted February 16, 2010 at 9:55 pm | Permalink

    What if we made not “Ypsi Bucks” but removable stickers that could be placed over the president’s face, to make a $2 bill into a “Ypsi Bucks”.

    Have you seen these:

    Bunny Bucks

    Santa Dollars

    So we get a printer to make us a bunch of removable oval stickers with
    this image printed in green
    ink to match a $2 bill. We then get a bunch of $2 bills, put the stickers
    on them. We’d add some words to the logo, like “Buy Local” or “Ypsi Bucks” etc. This would encourage people who get “Ypsi Bucks” to re-spend them in Ypsialnti, and if someone doesn’t want to play along, they just peel off the sticker and spend it at Wal-Mart.

  21. Kerri
    Posted February 16, 2010 at 11:07 pm | Permalink

    Let’s make it look like these! http://cgi.ebay.com/MICHIGAN-3-YPSILANTI-BANK-1837-FINE_W0QQitemZ290401352591QQcmdZViewItemQQptZLH_DefaultDomain_0?hash=item439d44fb8f

  22. Joe
    Posted February 17, 2010 at 12:39 pm | Permalink

    Detroit small business people tried it with Detroit Cheers and it seemed to fizzle out pretty quickly. Each dollar bill was backed by a dollar bill held in a bank account, by the way.

    I personally have never been able to wrap my brain around the value in it, other than as a marketing gimmick. I could also never understand why small businesspeople put so much time into something like this instead of something that is going to actually make money for their businesses. The people who are going to use the local currency are going to patronize local businesses anyway.

    I’m not trying to be a cynic, but I honestly don’t understand the payoff. So to speak.

  23. Posted February 17, 2010 at 1:09 pm | Permalink

    I’m going to go ahead and declare that my downtown Ypsi business, Huge Head Test Prep, will accept whatever local currency might come to pass–rate to be determined.

  24. Jack Price
    Posted February 17, 2010 at 1:57 pm | Permalink

    Why not trade in chocolate, nylons, salt pork, rice and sugar?

  25. Jack Price
    Posted February 17, 2010 at 1:59 pm | Permalink

    Sex, of course, would work as well.

  26. a220
    Posted February 17, 2010 at 4:49 pm | Permalink

    A timely headline in today’s Onion.

    “U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion”


  27. jean
    Posted February 17, 2010 at 8:26 pm | Permalink

    There are a lot of models for local currency. The most viable ones get backing from local banks. (sorry, but true) A good model for this and by far the most successful initiative I’ve seen is http://www.berkshares.org/.If you want to use your local currency at local restaurants running on a 3-5% profit margin, they need to be able to convert the money to cash– like agift card in reverse. They can’t necessarily afford to hold the money they take in until they can utilize it with a local supplier. It’s pretty darn hard to buy local food in the winter here still. Not that it’s not possible, just that the infrastructure and delivery system are not well enough developed yet. For the same reason (liquidity), it’s unlikely that low wage restaurant staff members or local landlords would be willing to take their pay/rent in local currency. Generally speaking, my gut is the liquidity issue in our very tight economy would severely restrict the utility of a local currency. I believe very strongly in enriching and developing our local economy. An innovation, however good willed, that is not strategically sound, will do a disservice to the local economy and the very businesses we are so eager to support. As mad as you are at the banks, a local currency system might put the true burden of fighting the entrenched financial system on local businesses. David and Goliath without the slingshot. I’d really like to hear from some of local business owners about how they think this might work or not work for them. In the meantime, if you want to support local business, just pay in cash. It’s like giving those businesses an extra 3% + on each transaction that would otherwise go to the credit card companies and the banks.

  28. Posted February 17, 2010 at 8:54 pm | Permalink

    Thank you all for your great, serious, thoughtful comments on this issue. It’s appreciated. And I’ll be sure to pass everything along to Ingrid.

  29. Andy Ypsilanti
    Posted February 17, 2010 at 11:33 pm | Permalink

    I have this idea about starting a group to do public projects around Ypsi (like a year round Ypsi PRIDE) where we pay volunteers in local currency, good for dinner and a drink at a local restaurant or goods at a local store. Maybe those businesses could get a small city tax break for participating in the program. This kind of program could be especially good for the unemployed, as it would give people the chance to earn a local currency while not effecting their unemployment payment. It could really help that small, small check go further to pay the bills if you could buy a meal for cleaning up a park or roadside…

    An idea a more than a little on the crazy hippie side I know, but it’s well past time for creative thinking here in Michigan..

  30. Yellow Dog
    Posted February 18, 2010 at 6:49 am | Permalink

    We should test the system to see where the limits are. Someone should go over there today, make a perfectly lucid argument, end it with three exclamation marks and see what happens. Or, to make matters even worse, try an emoticon like : (

  31. Posted February 22, 2010 at 12:14 am | Permalink

    I have developed a system (LocalMart) which gives a local currency an internet Ecommerce capability with a web site presence and shopping cart for each provider. It also has the capability to make local currency payments or funds transfers via mobile phone, making the issuance of a paper local currency almost unnecessary. LocalMart encourages all members to become providers of some locally produced, sustainable product or service so as to increase local self sufficiency and “close the loop” locally. LocalMart allows conversion to and from the local currency to dollars, and other features include a microloan capability and social networking so that members can interact, form or join groups, and otherwise communicate.
    I am in California but would like to begin to implement this and would welcome a discussion if there is any interest. My web sites are:

  32. Karl
    Posted March 1, 2010 at 10:07 am | Permalink

    Now the folks at Ann Arbor Dot Com are discussing it.


    And, I’m happy to say, our discussion was much better.

  33. Posted March 1, 2010 at 11:19 pm | Permalink

    Thanks for the link, Karl. I just scrolled through, and I have to agree with you. Our discussion here at MM.com was considerably more thoughtful. I don’t know if that’s always the case, but it does make me happy on occasions such as this, when I can be proud of our little online community.

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