Why Comox Valley Is Launching Its Own Currency

Vancouver Island's Comox Valley is launching its own community currency to revitalize the local economy and demonstrate that money can work in new ways.

Comox Valley's economy has suffered recently. According to the BC Check Up report for 2009, in the last three months of 2008, the Vancouver Island/Coast development region saw job numbers and business incorporations decline, while bankruptcies and dependence on unemployment and social assistance rose. According to the Mayor's Task Force on Homelessness, there are more than 250 people without homes and more than 3,000 others are at risk of homelessness.

To raise much-needed money without asking struggling local businesses to make an outlay of cash or stock, the Comox Valley Community Way non-profit will create a local currency, the Community Way Dollar. These dollars will cycle between local businesses, local community organizations, and people, functioning like a collective line of credit without interest and with a net value of zero.

Participating businesses donate local dollars to community organizations, such as 1,000 per employees, incurring a negative balance. Any business in the system can issue as much local currency as it thinks it can support. So far, businesses have granted roughly 97,000 community dollars to 14 registered groups, including Project Watershed, AIDS Vancouver Island and the Comox Valley Affordable Housing Society.

The community organizations use the community dollars at local businesses, trade to people in exchange for federal money, or pay people for volunteering or other donations.

A recent article in the Comox Valley Echo gave an example of why local businesses, charities and residents all might get a benefit from using Community Way Dollars:

"1. A local restaurant 'donates' 2,000 Community Way Dollars to the charity of their choice. No money changes hands, but the restaurant agrees to accept the same amount of Community Way Dollars from customers in future.

"2. A local resident donates $50 cash to the same charity and gets 50 Community Way Dollars in return.

"3. That donor then has dinner at the restaurant and gets a bill for $100. He covers the bill with CAN$50 and 50 Community Way Dollars, thereby getting two bangs for his buck -- he donates to his local charity and also get the same value in services from a local business."

Big push begins tomorrow

The big push for the system will be at the Big Time Out music festival tomorrow, August 15, in Cumberland's Village Park. The project plans to inject between 5,000 and 10,000 community dollars into general circulation, in part through an exchange booth where people can contribute a few hundred federal dollars to community organizations such as the school board, and get the equivalent amount of community money in exchange. People will also be paid 15 to 20 community dollars for participating in market research.

Once they have community dollars, people can use them to buy goods and services from the participating businesses, usually at some percentage of the purchase price. Those businesses, in turn, use their incoming community money to buy from other businesses or to pay off their negative balances. The local dollars can also circulate between people and between businesses.

Once enough local dollars are cycling through the community and its businesses, the local GDP will increase up to 30 per cent in a few years predicts Michael Linton, an engineer and physicist who is also the mind behind the Comox Valley Community Way.

Money that's not driven by fear

"Our money system looks backwards; it says pile up your assets and then sit on them, and then risk what you dare, if you dare risk what you've got. So it's all based upon the past and fear and greed, the usual driving engines. What we want is a currency and an economy that looks forward by its commitment to its own future," says Linton.

One source of disappointment for Linton is that the system will only use paper money for now, printed on a $3,000 credit at a local print shop. "That's just because we can't afford to go back to the smart cards we had ten years ago. And they're outdated anyway." He's looking forward to more advanced ways of moving money around, such as the M-PESA micropayment system used on cell phone networks in Africa. This kind of technology could make it actually cheaper to set up an electronic community currency than to print and distribute paper money.

This project is the latest version of a series of local currencies Linton and his comrades started in the Comox Valley. As described in an earlier Tyee article, the first implementation was a simple affair that began in 1982, a virtual bank on an answering machine. The system operated without much business participation until 1988. "It sort of dried out in '88. Now, it didn't stop in the sense of crash, burn, collapse, disappear, do a Ponzi, run on the bank sort of thing. It just stopped being used, sort of like people give up using a bicycle if it is in the shed," says Linton.

Part of the reason was that the local dentist moved away, causing a cascading collapse of the system's credibility. Linton has put the concept through other cycles over the past two decades, with varying degrees of success, in part due to lack of participation from the business world.

Other 'complementary currencies'

Meanwhile, similar systems, known as community currencies, complementary currencies or open money, have sprung up around the world, including elsewhere on Vancouver Island, though not in Vancouver.

Some of these have a strong anti-corporate sentiment and deliberately exclude businesses in favour of the “small and cuddly”, such as Victoria's LETS system. Linton dismisses it as, "Sad. Too much aromatherapy... It's a little hobby for a few people, and it makes absolutely no difference to anything at all, and never will."

Others, such as the Saltspring dollar and the Toronto dollar, are based on the belief that currency must be backed, and rely federal currency. Linton calls this an "eddy currency," which swirls on the edge of the river but doesn't go anywhere. "The process that they're adopting is what I'd call a knee-jerk reflexive response to the anxiety about ‘Money has value. It must be guaranteed by something.' In assuring that they have that guarantee, they completely cripple the process."

In a pure implementation of open money, the local currency must be equivalent to but separate from the national currency, and backed only by the trust and reputation of the businesses involved.

Changing how money works

The point of the open money movement is to change the way money works (a 'manifesto' promoting the idea is posted here, and a video explaining the Comox Valley project is here).

Linton says, instead of money being a scarce resource that a central authority lends into existence for other people to fight over, money should be viewed as a method of measuring, organizing and exchanging goods and services that already exist. "We're involved in a vicious, perpetual fight, simply because we haven't the imagination to realize that money is just measure. If you create measures which are effective and interactive and convivial, then you can have a community economy that's not just quantitatively enhanced -- and we're talking substantial levels here, I'm looking in the region of 10, 20, 30 per cent of GDP in these models within a few years -- but the quantitative aspect is actually secondary to the qualitative consequence of having money that moves around rather than moves through the community."

On a larger scale, open money supporters hope to change the way capitalist society operates. Ernie Yacub, a colleague of Linton on the Comox Valley project, has a background in the environmental movement and has been involved in community currency since 1995. He sees open money as encouraging environmental protection and sustainability.

"The way normal money works is that, essentially, it sucks and corrupts," he says. "We will cut the last tree and fish the last fish to get the buck. We all do that... What I would suggest is having our own money, which we can create as needed, as an antidote to that problem. Not only is it an antidote, it creates a different form of relationship, not only with each other, but with our community and with our forests and or fish. Because if you don't have to sell that last tree to the corporation, why would you?"

Reasons for locals to buy in

For Linton, getting local businesses involved is pivotal, the lack of which has plagued earlier iterations of this system. The Comox Valley Community Way's website lists 38 local business that accept Comox Valley dollars for a certain percentage of each purchase, from 100 per cent at the Acupuncture and Oriental Medicine Centre to 25 per cent on bikes and accessories at the Broken Spoke Coffee House.

Matthew Archer, proprietor of Archer Mechanical, says that in poor economic times, it might be a good thing to have around. He has donated one thousand community dollars, and will accept them back for 25 per cent of purchases, or 50 per cent of labour. He plans on using the CV dollars he receives at the butcher or the coffee shop.

Devin Moldenhauer, owner of the Avalanche Bar & Grill, considers the idea "a good community project that will help out businesses small and large, and community projects." He takes local currency for up to 50 per cent of each purchase. Though he isn't paying them out yet, he may give them out as an incentive.

Linton says that if a one billion dollar economy like the Comox Valley can raise one million dollars for homelessness through a community way, then Vancouver could raise $100 million just as easily.

Spreading the gospel of new money

Last year, Linton and Yacub spent time in Vancouver trying to interest people in using community currencies in areas like the Downtown Eastside to compensate for the impact of the Olympics and to raise money for good works. However, little has happened as yet. "It's not an easy concept," says Yacub. "Until you can point to something and say, 'See, this is how it works,' it's in the realm of fantasy. And for people who are busy doing whatever it is they're doing, it's difficult for them to sort of shift into another way of thinking."

One of the best prospects comes from Toby Barazzuol, community organizer and president of Eclipse Awards, who has been exploring the idea for the Downtown Eastside. However, he says that there might be something happening in October of this year.

Linton has high hopes for the future of open money, predicting that, "Vancouver's probably going to have something like a thousand currency systems inside a couple of years. Some of them localized by region: Kitsilano, Commerical, whatever, even Point Grey, who knows? Others will be sectoral: women, aged, cultural groups, Chinese money, Greek money of West Broadway." Future software could make setting up an open money exchange as easy as making a discussion group on Google or Yahoo.

Even after more than 20 years, Linton still faces a lot of resistance when promulgating his ideas. "What we're engaged in at this point is giving the demonstration of the viability of these moneys so that people can jump past the threshold of what's this for or why, and goes straight to, how do we do it? And 'how do we do it?' becomes increasingly simple, and in fact in a few weeks I expect we'll be able to publish very interesting figures on how little it costs and how much you can do with it, straight out the door."