Wednesday, December 1, 2010

Cash, Check or BNotes- Weighing a new city currency option

From the Baltimore Guide
October, 13, 2010

European nations have the Euro. Would that make Baltimore’s projected new currency the Balto? The Crustacean? The Hon?

How about the BNote?

If the organizers of the Baltimore Green Currency Association have their way, the city’s new alternative money system will launch next spring.

Jeff Dicken of Canton and Michael Tew of Greektown are spearheading the effort to create an alternative economy, one that would, if all goes according to plan, pump money straight into local businesses and keep commerce local.

The B-note is a genre of money known as “complementary currency” that is designed to be used in a specific and limited area. Dicken says such currency is in use “in dozens of cities in the U.S.”

The Berkshires, he notes, are home to BerkShares, and Ithaca to Ithaca Hours. Pittsburgh has the Pittsburgh Plenty.

The idea is that the currency is used in small independent businesses that are based in the city.B-Notes would not be used in large chain stores or other organizations with out-of-town, or out-of-state, headquarters.

Local currency, notes Dicken, helps strengthen the relationship of local supply and demand, plus “it re-introduces a social aspect to commerce. Buying things locally reduces the need to bring things in from otuside the community.”

In addition, he notes, local currency “provides economic opportunity — we can provide very small loans, create jobs, etc. These would be for loans that conventional banks won’t touch.”

And while there’s a name for the currency so far, the look of the note is still being decided upon. In fact, there’s a contest for local artists interested in contributing; information is available on the website, Ideally, it sould be more colorful than standard U.S. currency, and of a slightly different size.

At the moment, the association’s efforts are devoted to marketing the idea to local businesses who might be willing to work with the new currency.

“Right now we’re in the education phase because there are quite a few people who don’t know exactly what money is. We want to raise people’s consciousness,” says Dicken.

“Complementary currencies have been shown to circulate within their region many times faster than the national currency, which increases everyone’s sales,” says a statement on the organization’s website.

“This is one reason local currencies became popular in the 1930s – they were an effective way to build business and create jobs as the effects of the Great Depression continued to be felt across the country.”

The initial rollout of BNotes is planned for Hampden. Dicken says thast several businesses have expressed interest, including Breathe Books and Alpha Graphics. If the rollout is successful in Hampden, it may move to other neighborhoods. “One avenue we may use to expand the area where the BNote is in use, is to coordinate the expansion with an organization such as Baltimore Main Streets,” he says, and mentions Fells Point and Highlandtown.

Chris Ryer of Southeast CDC in Highlandtown says that in general, he thinks local currency is a good idea. He thinks Highlandtown would be a better rollout point than Hampden, being well-balanced with a number of small local merchants, and filled with a population that likes to use those businesses, such as the thrift stores, hair salons, groceries and more. In particularly, he adds, the Latino population would be a strong factor in the acceptance of another form of currency.

The BNote would have a value equivalent to a dollar; in other words, one Bnote for $1, and so forth. However, in exchanging currency, there are incentives. $10 would be worth 11 Bnotes. If changing money back to U.S. dollars, $10 would be worth 9 BNotes.

Rob Santoni, controller of Santoni’s Supermarket, says that if the BNotes roll out as described, “I can see us looking at it. Any program that can link city patrons to city business is a good thing. It puts a wall around the city and makes it our own national with our own dollars that we don’t leak to the suburbs.”

However, he acknowledges, there’s a big difference between a great theory and a working financial system, since “I just see the logistics and the banking regulations as steep hurdles to overcome.”

Dicken knows that there are skeptics out there, but describes alternative currency as “a hybrid barter system,” and believes that it will gain acceptance much the same way frequent flyer miles, Nintendo points and credit card rebates have.

“Ultimately,” he notes, “if there were some kind of a dollar crisis, the BNote could emerge as a stable source of value.”

According to Dicken, the Baltimore Green Currency Association is working with the Patapsco Bank to provide services, and expects some stores to act as cambios, or exchange offices, for BNotes.

Fells Point resident Laura L. Gamble, former president of Bank of America-Maryland and a founding member of Skipjack Partners, a business consultancy, is a little more reserved.

“To me, it looks like a clever merchant discount program since you get 11 local dollars for $10 U.S. I think the difficulty in programs like this is keeping the local currency circulating because people may use it once to try it, but if there is not a lot of outlets for it, people’s interest may wane. The question will be whether the discount and the desire to support local merchants will be enough of an incentive to keep it going.

“That’s my two cents – in U.S. Currency, legal tender for all debts public and private,” she jokes.

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