1. PLUG THE “LEAKY BUCKET” THAT DRAINS LOCAL WEALTH
This is the core idea: research shows that money spent with local businesses (rather than big chains) has up to five times the impact on the local economy. Instead of being sent back to a national head office, this money is likely to be spent with other local suppliers, to employ local workers or provide local services – all benefiting your community.
So, because the vast majority of a local currency will be spent locally, it’s a great way to keep value circulating in your neighborhood. Encointer goes further – we use demurrage to create an incentive for members to spend their money, not hoard it. That means each Encointer income has a strong multiplier effect: it isn’t spent just once, but over and over.
2. LOW-INCOME AREAS BENEFIT EVEN MORE
In regions where money is in particularly short supply, a local currency can do even more good. If the area is hit by a seasonal gap in earnings, for instance, local currency can be a way to keep value circulating in the dry spell. It also creates resilience against wider economic shocks – remote towns shouldn’t be so vulnerable to crises in the financial centers.
3. YOU CAN ADAPT ENCOINTER TO YOUR NEEDS
Every community is unique, and what works for one may not be right elsewhere. Encointer gives each community the flexibility to set their own rules. For instance, to reduce inequality, you could opt for higher payouts of community-issued income, and higher demurrage, which yields stronger redistribution of wealth.
4. A WELL ESTABLISHED TOOL
Far from being a radical proposal, local currency issuance is a well established tool. In the early 20th century, currencies such as the Wörgl “Freigeld” were created to fight economic depression and improve local service provision. A hundred years later, new paper currency experiments were launched in towns around the world, from BerkShares in the US to the UK’s Bristol Pound. Caught in the transition to a cashless economy and struggling with administrative problems around physical distribution, many of these have since folded, but new technology can do away with those challenges.
5. ANYONE CAN GET IT – REALLY ANYONE
A lot of uplift programs rely on government identification or bank accounts. Encointer doesn’t. All you need is your phone, and the ability to show up at a meeting; you don’t even need to give a name. With an estimated 2 billion people around the world unable to access banking services, this can be a big step toward financial inclusion.
6. IT BOOSTS COMMUNITY COHESION
Using Encointer gives users a real sense of the power of the local economy and promotes community engagement. That’s true for merchants, too, giving them a solid reason to support each other, and strengthening local networks.