Brazil’s Local Money [Local]

From WSJ

Towns Issue Their Own Money, Which Brings Local Discounts

[…] The capivari circulates only in this dusty, agricultural town 60 miles north of Rio de Janeiro. The money is an effort by the town, one of the poorest in southeastern Brazil, to encourage its 23,000 residents to spend locally.

The capivari is one of 63 local moneys now circulating in needy towns and neighborhoods throughout Brazil.

Ten months after introduction of the capivari—named after the capybara, a pig-sized rodent common in a local river—the currency is lifting fortunes of local retailers and gnawing holes in the pockets of consumers. Capivaris pay for everything from haircuts to restaurant tabs to tithing at churches. The mayor even has plans to open a “Capivari Megastore,” where local artisans and growers can showcase wares.

The capivari is one of 63 local moneys—including bills named after the sun, cactus and the Brazil nut—now circulating in needy neighborhoods throughout Latin America’s biggest economy. The idea is gaining currency as towns seek a share of current economic growth. This month, a new local currency hit the streets in Cidade de Deus, the Rio slum that was the subject of a blockbuster film and a stop on President Barack Obama’s South American tour this year.

While equal in value to the real, local currencies gain traction because local merchants offer discounts when using them. No one is forced to quit the real, but shopkeepers say greater volumes make the markdown worthwhile…

Capivaris are managed by a new, community-run Capivari Bank. Inside its one office, a brightly painted space the size of a small fast-food joint, are the bank’s employees, three women in their 20s.

For each of the 50,000 capivaris first circulated, Capivari Bank holds an equal number of reais on deposit at a traditional bank. Tatiana da Costa Pereira, the bank manager, says she sees as many as 60 clients a day. A local police car patrols outside and a state policeman comes in regularly.

The currency has been so successful the town ordered a second run of the notes, which bear serial numbers, watermarks and a hologram alongside the whiskered varmint…

Original story here

One Comment

Inspiring news and valuable ideas about how to establish effective local currency.

“Capivari Bank holds an equal number of reals on deposit at a traditional bank.” and “While equal in value to the real, local currencies gain traction because local merchants offer discounts when using them. No one is forced to quit the real…”

These two points, I think, would be most helpful in establishing a local currency in Mendocino County and/or Ukiah or anywhere in America. If disbelieving consumers could cash in local currency for “real” dollars a few times at an actual bank, they would prove to themselves that local money had “real” value, and if shopping with local money saved them 20% on their purchases the switchover would happen quickly. I don’t think a 10% discount would do the trick, but 20% would.

This means that local merchants would be the ones taking risks until the local currency took hold. And there is that Capivari Bank with three employees that legitimizes the process in the eyes of the public. So there would need to be seed money to get the process going until the retention of all that wealth locally began to pay off in the larger local scheme of things with new local businesses and job creation and more money circulating locally.