The Brixton Pound goes electronic - a small step on the path to democratising money

We’ve heard a lot in recent years about ‘financial innovation’. Much of it has been ‘socially useless’ or, indeed, catastrophic for our economies and wellbeing. But on Thursday, in Brixton, London a new financial instrument will be launched, using the latest mobile phone and internet technology, designed to do social and economic good. 

The Brixton Pound e-currency (B£e) will reward its users for spending at local, independently-owned businesses. You know, those businesses that create jobs and growth, that preserve the diversity of our high streets. The kind that our banks aren’t too keen on lending to.

The UK’s first electronic local currency system, operated through simply sending text messages to execute payments, will reward customers by giving them a 10% bonus. So for every £10 sterling they buy they will get B£e11.00 to spend with participating independent traders. This additional purchasing power can be maintained if businesses re-spend B£es with each other but will be lost if they change back to sterling, thus stimulating the local economy and keeping wealth circulating locally. 

Previous research by nef and others shows that smaller independent businesses re-spend much more of their income locally. At a time when inward investment and public spending has dried up, communities need to seek ways of making existing spending work harder.

The ICT platform behind the system, called ‘Monea’, had been jointly developed by nef and the Dutch NGO QOIN with support from The Transition Network. Further pilots are planned, with the next scheme to launch across the whole of Bristol in Spring of next year, a further UK pilot and 3 pilots in Holland. 

The system provides a genuinely new and cost effective means of receiving electronic payment for small traders who may be reluctant to use credit cards because of the high costs. The pay-by-text system has no hire fees or hardware costs and there is just a 1.5% transaction fee for receiving texts. Many of Brixton’s small market traders have signed up to the scheme. The e-currency is also being supported by Lambeth Council as part of their Cooperative Council strategy.

Paper-based local currencies have a long if chequered past. Some seem to lose momentum after the initial launch. Part of the reason for this may be that paper money is a thing of the past. 97% of money in circulation is created electronically by private banks when they make loans, as nef explains in a book due to launch tomorrow.

The Brixton Pound e-currency pilot is a small but significant step in attempting to re-democratise our monetary system and make money work for communities, small businesses and local economies, rather than big banks and supermarkets. Watch this space for more.