by Corey Matsumoto

Cash has been king of Canada’s economic system since the gold standard was abandoned in 1931. However, in the current economic climate we have a problem with cash—a system-wide lack of it. In a depressed economy, cash disappears but the skilled people remain, revealing a growing disparity between the value we hold in our wallets and the value we hold as creative, productive members of our community. The resulting cheapening of human resources can devastate the morale of a community as persons rich in skills and creativity head to the food bank, while shopkeepers slash prices, with disheartening results.

Many of our financial difficulties are virtually out of our control. Globalisation has forced us to relinquish control to outside forces. U.S. lobby groups influence our provincial government to the detriment of our wood and paper mills, placing higher value on BC’s raw-log exports than to value-added products that would provide us with desperately needed jobs. Energy bills are going up, but the government seems set on privatising our hydro power for American-backed corporate profit despite the lessons learned from sky-rocketing energy prices in de-regulated California. Fractional-reserve banking allows banks to mint money out of thin air and then charge interest for it, resulting in the proliferation of predatory loans, which in turn result in mass defaults and bankruptcy.

Ironically, yet another cause of financial difficulty in our community is an economic system that leads to out-of-town shopping in higher-density markets, resulting in economic hari-kari as local businesses falter.

These and many other out-of-control factors that define our faulty economic system are robbing us of prosperity. It is just so easy to throw our hands up in the air in despair (or just throw up!).

There are, however, ways for communities to take back some control of their economy. Either by force or forethought, rather than simply falling victim to the system, many communities around the world have boldly taken action by instituting their own local currency.

Local currencies can rebuild local economies by simplifying complex barter-like transactions, empowering individuals to re-attach economic value to themselves and their skills. More importantly, they afford an alternative system of payment in an economy with sluggish cash flow.

A legal local currency can be created by any organisation, business or individual. In times of crisis, even local, regional, or national governments throughout the world have instituted local currencies, which have a long history going back to before the Great Depression.

Although federal currency is conveniently universally accepted for face value everywhere, local currency has value only to merchants and individuals within the community who choose to accept it. This is the underlying purpose of creating local currencies—keeping money flowing within the community. Effective local currencies stimulate local economies because they are non-interest-bearing and thus never go up in value; however, they are still tied to the inflationary national currency, resulting in a currency that is best circulated rapidly rather than hoarded.

Local currency is not meant to replace national currency completely; rather, it runs parallel to it. Businesses and individuals trading in local currency are still liable for GST, PST and income tax but these liabilities must be paid in federal currency of equal value. To make the system work, most participating businesses require partial payment in federal currency to ensure monies are available for these taxes and expenses not payable in local currency.

In western Canada, the communities of Salt Spring Island, Nelson, and Calgary have all instituted their own local currencies. Kirti Bhadresa, a co-ordinator with Calgary Dollars (C$), states that approximately eighty thousand dollars’ worth of C$ is in circulation throughout the city. C$ can be used to purchase hundreds of different products and services from individuals and participating businesses (including Calgary Transit). Participants get C$20 just for signing up to the program. Monthly C$ community-potluck markets provide opportunities to network with other participants and provide more access to the currency through the selling of hand-made goods or other items in C$.

The inspiration for Calgary Dollars came from Ithaca, New York, where a local currency (named Ithaca Hours) has been in circulation since 1991. This groundbreaking system took a step further by offering interest-free loans to businesses and individuals in Ithaca Hours, with the stipulation that all funds are spent within six months and repaid within a year.

So what is needed to get a similar system happening here in Powell River?

Robin Morrison of Wellness Energy Services was a Business Coordinator with Calgary Dollars for 3 years before moving to Powell River in the winter of 2005. She advises that an alignment with a non-profit organization with access to core funding from the United Way or similar foundation is needed, and that there is also a need to hire a coordinator with a variety of skill sets in community development, marketing, self-employment, small-biz ownership—and a big interest in making the world a better place.

With over 2,500 local-currency systems operating throughout the world, including extremely successful models in our own country, establishing a local-currency system here in Powell River is not a far-fetched idea. In these days of financial trouble, regaining as much control over our local economy as we can would seem a priority.

Local currency may seem a big leap for Powell River: fundamental changes must be made at the local level and within our collective psyche. Perhaps we need to make a few smaller first steps towards instituting bartering as a standard way of life. Encouraging every single household to save seeds and grow food—if only one or two garden vegetables, would encourage barter among neighbours. We’ll begin to rediscover community and realise the power we have within us to save ourselves.