In this edition of “Currency Corner,” we discuss the challenge of building trust in using local currency and identify steps to address this challenge.
The challenges of building community trust in using a local currency is not unique to the Current: Currencies around the world face this challenge. For example, in a study of digital community currencies in the Czech Republic, close to two-thirds of the 422 community members surveyed knew of the term “digital currency,” but only 11% said they had trust in the concept. Trust barriers noted include a fear of being left with earned currency and no places to spend them; insufficient numbers of trading partners willing to accept the currency; not understanding the rationale for the currency and its benefits; fears that some members will take advantage of the trust of others, building unsustainable negative account balances; and a lack of participation by municipalities and anchor organizations (e.g., universities, utilities) in the currency exchange network, which limits currency usage.
Special trust challenges exist in poor communities. Many community currencies originate in middle class and affluent communities and expanding reach to members of poorer communities can be challenging. Residents with lower incomes may have pressing priorities for currency usage such as using earned currency to pay for rent, utility payments, taxes/fees and food. If trading partners for these goods and services, especially local governments, are not accepting the currency or vendors are not easily accessible, currency uptake and trust will likely wane. Currency uptake can be constrained if local leaders do not embrace its usage. Fortunately, jurisdictions including our Hudson Valley Current, are taking steps to address these barriers and a few of these steps are outlined below.
Community Education: Feedback provided by local nonprofit leaders in a set of interviews sponsored by HVC included the importance of finding ways to communicate currencies in a manner that is easily understandable. Suggestions included developing a short video with animations explaining the Currency and finding ways to include community currency in conversations of economic justice and reparations. Supporting and preparing local community “ambassadors” to promote the currency is another interesting idea.
Enhance outreach, input and engagement: While most local nonprofit leaders that were interviewed shared that they were familiar with the Current, many were uncomfortable in promoting it, not sure about the impact of its usage for their organization and the larger community. It is important that community leaders understand the potential impact of currency usage, identify ways in which the currency can help their community, and be empowered to implement these ideas.
Building on Affinity Group Relationships: Currency usage can start small, among family and friends or members of a faith organization, civic group or local NGO, many of whom are already bartering goods and services. Because of common bonds, users are likely to trust each other in meeting obligations, making currency usage low risk. Expansion of currency usage to a next cohort of friends and colleagues could build off these initial successful transactions. HVC is using a variation on this approach, building cohort trading in Currents among 10 nonprofits that receive Community Resilience Program (CRP) awards.
Local Leader Engagement: Endorsement and usage of Currents by government entities and/or key community organizations and leaders build instant credibility. Other influencers promoting currency usage, such as faith leaders, entertainers and athletes, can also help build trust. Involvement in currency governance and policies by these stakeholders builds “stake” in the local currency, which leads to greater engagement.
Incentives; HVC currently offers up to 300 Currents (equivalent to $300) for new members to begin to use Currents. Examples of additional incentives to spark usage include providing Currents to customers as a gift for amount of dollars spent at local businesses; businesses offering Current “bonuses” to staff along with suggested ways to spend them; NGOs offering Current awards for certain personal milestones reached by service participants and foundations; and companies providing Current awards to organizations and collaboratives that meet predetermined goals on priority community projects.
Mobilize around a Community Need: Recent research shows that communities that use community currency to “systemize” local initiatives (such as food security or waste management) are able to attract organizations and businesses to participate in the initiative and become currency members. Because these initiatives are high profile and long term, this strategy may be the most important one in building long term currency trust among multiple stakeholders. Addressing trust barriers is essential to the long-term success of a community currency such as the Current. I hope these suggestions spark discussion.
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