The Bristol Pound (£B) is a community currency in the city of Bristol, U.K. Launched in September 2012, it is the first city-wide instance of a Transition currency in the U.K. The scheme is a partnership between The Bristol Pound Community Interest Company (CIC) and Bristol Credit Union 1 . The project garnered the support of Bristol Council, which has enabled the payment of some local rates (taxes) in Bristol Pounds. Bristol’s first elected mayor, George Ferguson receives his full salary in Bristol Pound.
The primary purpose of the £B is to strengthen the local economy by incentivising people to shop at independent local businesses as well as encourage and reinforce the strong sense of identity and civic pride that people in Bristol feel for their city. Bristol’s independent businesses are crucial to that community identity. By incentivising spending in independent businesses, the £B helps wealth created in Bristol to stick locally. Known as the local multiplier effect 2, £Bs are meant to be spent repeatedly within the local economy. This way, the £B can help deepen and diversify the connections between local business people and all the citizens of the region – an important part of building a sustainable regional economy and providing high quality employment.
From another perspective, the £B is a response to the economic damages local businesses suffer from multinational chain stores and global supply chains. Not only are consumers encouraged to frequent local shops, but these businesses are equally encouraged to trade with each other and create or maintain local supply chains. On top of this, Bristol Pound can be used to pay some personal council tax, business rates, staff wages, and spent for business and professional services.
Bristol is a city and ceremonial county in South West England, United Kingdom. It is a multi-ethnic city where a significant part of its residents are African and Asian descent. Bristol was awarded as Britain’s most sustainable city in 2008, according to Forum of the Future’s Sustainable City Index.
With a population of 433,100, Bristol is U.K.’s 8th most populous city and one of the major centers of culture, education and employment of South West England. Including the neighbouring areas, where the Bristol Pound is accepted through the “Farm Link” initiative, about 1 Million people can potentially benefit from the £B.
Bristol Pound CIC (Community Interest Company) is a non-for profit enterprise which works closely with the Bristol Credit Union for the establishment of the electronic £B. The £B CIC has also established very good relations with the City Council, even prior to the currency’s launch, to further expand the uses of the currency. It has received funding and in-kind support from the Forum for the Future, Bristol Credit Union, Bristol City Council, Bristol Green Capital, The Tudor Trust, the New Economics Foundation and the Transition Network.
Organisation and History
The idea for the Bristol Pound was conceived from the Transition Town Bristol group, inspired by the success of other so called Transition Currencies like the Brixton Pound in London and the Totnes Pound in Devon. It was launched as a paper and an electronic currency (£Be) at the same time on 19 September 2012 after two years of preparation, as a way to support Bristol’s independent businesses, strengthen the local economy, and contribute to community building efforts.
As the operator of the paper currency and the marketing and network building efforts, the Bristol Pound CIC (Community Interest Company) was established with its specific social goals and with the assets of the company ‘locked in’ to community control. It will be governed in line with the model of a stakeholder cooperative giving Bristol Pound account holders a say in the development of the company and representation on the board.
The electronic £B currency is semi-independently run by the Bristol Credit Union. Every user of the electronic Bristol Pound becomes a member of the Credit Union which runs the £B accounts and holds the GBP which are exchanged for £B in a trust account.
Given the novelty of the scheme, its impacts have not yet been quantified through research. However, the Bristol Pound gathered much media attention in its first operative year and was granted much support by the Bristol Council, which early on accepted local taxes to be paid in the local currency. Recently £B achieved a modern world first with the public transport company First signing up to accept £B for fares paid on buses and office counters. 3
The Bristol Pound in numbers
At its launch, more than 350 local shops and businesses had signed up for accounts. Circulation reached £100,000 after three month and £200,000 in July 2013 making it the largest not-for profit complementary currency of the UK. Figures of August 2013 suggest that more than 600 local businesses accept the currency and more than £260,000 has been converted into £B. There are more than 1,200 electronic £B accounts.
Function and Unit of Account
The Bristol Pound’s primary function is to act as a local medium of exchange. Its unit of account is the pound sterling – one Bristol Pound has the same purchasing power as 1 GBP, however it is not legal tender in the UK.
Issuance – Backing
Bristol Pound operates both as electronic and paper currency. While there are physical notes in denominations of 1, 5, 10, and 20 B£, electronic Bristol Pounds are exchanged online or by text-messaging, here called ‘TXT2PAY’, between designated no interest bearing accounts at the Bristol Credit Union (BCU).
There are several ways by which £B can be brought into circulation:
- Pound sterling can be exchanged for Bristol Pound at a 1 to 1 rate in 8 exchange points across the city and at Bristol Credit Union;
- Paper Bristol Pound can be obtained by making an equal TXT2PAY payment to an exchange point;
- Electronic £B accounts can be credited by transferring funds from a normal GBP account or by cash and cheque deposits at BCU.
- Get Bristol Pound as change when spending at any subscribing businesses in pound sterling.
Printed Bristol Pounds cannot be exchanged directly for pound sterling.
Each individual £B account held at the Bristol Credit Union is protected by the FSCS for up to 80.000 pounds, in just the same way as pound sterling.
Bristol Credit Union uses the Cyclos based CC2 ICT platform to administer the e-currency. Customers can use the platform via the Internet or by sending text messages (TXT2PAY) on their mobile phones. The software was developed by Qoin as part of a collaboration project with the New Economics Foundation, Brixton Pound and Transition Network in 2011-2012, part funded by Tudor Trust. The software was made publicly available in June 2013 4.
Taxation and Compliance
The UK Financial Services Authority (FSA) has determined that the electronic version of £Be should be excluded from new EU e-money regulations as it is being administered by BCU, a licensed deposit taking institution, which as such does not require an additional e-money license.
Business accepting Brixton Pound account for it as GBP income, no tax exemptions apply. The Bristol Council accepts Bristol Pound for payments of some local taxes.
Individual members of Bristol Pound cannot exchange their local currency into pound sterling, nor can they convert it from paper to digital currency. Businesses, however, can exchange their Bristol Pounds into national currency. The terms and conditions for business members state a 3% malus for this conversion but this has never been collected to date.
A 2% transaction fee is charged to the receiving business accounts when accepting payments by text message.
How it works in practice?
Consumers can become members of Bristol Pound by opening a Bristol Pound account at BCU and then transfer some pound sterling. Similarly, paper Bristol Pound can be acquired at several exchange points across the city. The TXT2PAY scheme works through the online Bristol Pound account and enables members to pay any purchases in Bristol Pound by text message (sms). When paying at a restaurant or participating shop, the customer would request the shop’s user-name and send a text message to the Bristol Pound payment line in a specific format which requires the sender’s personal security code, the recipient’s user name and the amount to be paid, e.g.: “Pay 1234 TraderJack 4.99”. Both customer and business get confirmation messages on their cell phones when the payment has gone through, which typically takes only a few seconds.