Sunday, July 19, 2009

Berkshares- a model for a Bay Area regional currency?

The purpose of BerkShares is to function on a local scale the same way that national currencies have functioned on a national scale—building the local economy by maximizing circulation of trade within a defined region. Widely used in the early 1900s, local currencies are again being recognized as a tool for sustainable economic development. The currency distinguishes the local businesses that accept the currency from those that do not, building stronger relationships and a greater affinity between the business community and the citizens of a particular place.

The people who choose to use the currency make a conscious commitment to buy local first. They are taking personal responsibility for the health and well-being of their community by laying the foundation of a truly vibrant, thriving local economy.

BerkShares will not, and are not intended to, replace federal currency. Their use will help strengthen the regional economy, favoring locally owned enterprises, local manufacturing, and local jobs, and reducing the region's dependence on an unpredictable global economy.

BerkShares are placed in circulation when citizens exchange federal dollars for BerkShares at any of the BerkShares Exchange Banks (see list below). Some restrictions may apply.

The exchange rate is ninety-five cents per BerkShare. Ninety-five federal dollars will yield one hundred BerkShares. BerkShares are printed in 1, 5, 10, 20, and 50 denominations of BerkShares.

Federal dollars remain on deposit at the BerkShare Exchange Banks to redeem excess BerkShares at a five percent discount. 100 BerkShares would be exchanged for ninety -five federal dollars.

The five percent discount is part of the exchange rate, not a discount given at the point-of-sale. That 5% doesn't "go" anywhere - no one is making a percentage on BerkShares transactions. To explain more clearly, let's follow 100 BerkShares through a common transaction:

One day, you decide to go out for a nice dinner. You go to the bank to purchase BerkShares to spend at a local restaurant. You go in with 95 federal dollars and exchange them for 100 BerkShares. You go to dinner, and the total cost comes to $100. The restaurant accepts BerkShares in full, so you pay entirely in BerkShares. Therefore, you've spent 95 federal dollars and received a $100 meal - a five percent discount for you. The owner of the restaurant now has 100 BerkShares. They decide that they need to deposit them for federal dollars and return them to the bank. When they bring them to the bank, the banker deposits the 100 BerkShares you spent on dinner and gives the restaurant $95 federal dollars, the same 95 dollars that you had originally exchanged for BerkShares. The end result? You receive a five percent discount because of the initial exchange, but the same $95 you originally traded for BerkShares all goes to the business where you spent those BerkShares.

Citizens with BerkShares in hand will look for the "BerkShares Accepted Here" sign in store windows or can browse the BerkShares Directory. BerkShares are accepted at face value for goods and services—10 Berkshares for a $10 purchase, though some restrictions may apply. Every business listed in the BerkShares Directory and displaying the BerkShares sign commits to taking full or partial payment for its goods or services in BerkShares. Most listed businesses accept BerkShares for the full value of an item, but some find they cannot and so it is important to ask about store policy before making a purchase. BerkShares provide a flexible and adaptable tool to meet the needs of differing business.

Change for purchases in BerkShares will be made in BerkShares. Customers paying with federal dollars may ask for BerkShares in change.

By accepting BerkShares merchants are helping to establish markets for locally made products, providing an incentive for the growth of home-based industries and creating opportunities for those underemployed and unemployed to turn latent skills into business ventures.

Any business or individual may accept BerkShares as payment and then spend them as they choose. You are not required to sign up with BerkShares, Inc. to trade in BerkShares! However, we strongly advise that you do choose to sign up with us and join our business directory for a number of reasons. First, you'll receive materials that will help you trade in BerkShares, including brochures, information, stickers, and other promotional materials; second, you'll receive our updates and newsletters, which will keep you informed of the latest BerkShares developments, and third, you'll receive free listings in our online directory and in any future print or display advertisements or catalogues that feature a list of businesses.

Everyone benefits from using BerkShares. Consumers benefit from receiving a 5% discount on purchases. Businesses benefit from increased patronage. Local non-profit organizations can also benefit by purchasing BerkShares at the 5% discount rate and selling them at full face value to their supporters.

It will take citizens working in their own communities, region by region, to create the kind of systemic change that will lead to sustainable economic practices—practices that foster ecologically responsible production of goods and a more equitable distribution of wealth. Local currencies are a tool to bring about such change. BerkShares are about building community while building the local economy.

(This information was taken from the Berkshares website. To the best of my knowledge, it is my understanding that Berkshares intends this project as a transition and hopes to delink from the US dollar at some point.)

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