The following open letter is a part of the Presidio Graduate School’s Capital Markets course. For one of the course assignments, students write a letter to an oversight body, government entity or other appropriate institution. The topic: changing the sector of capital markets that relates to their chosen topic so it reinforces principles of sustainability. Follow along here.
An open letter to Mayor Edwin Lee, San Francisco
Dear Mayor Edwin Lee & Controller Ben Rosenfield:
We are writing to suggest that the city of San Francisco consider adopting a local currency to support small businesses and encourage local spending. A San Francisco currency would not replace the use of US dollars. Rather, it would function as a complementary means of exchange that can be earned and spent within the city, stimulating local economic transactions and benefiting both residents and businesses. As a leader in progressive thinking and policy, San Francisco is a prime location for this type of economic initiative.
Local currencies can create economic benefits in the regions where they are used because the currency remains within a defined area, and value travels in a closed loop. For example, if someone buys a book for $10 from a bookstore in West Portal using local currency, that money is guaranteed to be passed to another establishment in the community. The more times that $10 circulates in the community, the more local wealth it creates. However, if the same book is purchased at Amazon.com, that $10 leaves the city and never comes back.
The overall impact on cities and regions that have adopted local currencies has been overwhelmingly positive. Community ties are deepened when a seller and a buyer are able to interact and support each other in their successes. Beyond encouraged local spending each has created self-sustaining economies, strengthened and empowered communities, and contributed to a deeper knowledge among participating individuals about their communities and the stories behind their goods. There are several examples of successful local currencies:
- BerkShares, local currency for the Berkshire region of Massachusetts, has circulated more than $2.5 million in BerkShares since 2006 through 400 businesses that accept the bills including restaurants, pharmacies, gardeners, and attorneys.
- The PLENTY in Pittsboro, NC, can be exchanged for dollars through the locally owned Capital Bank to help keep them circulating regularly.
- Ithaca HOURs, in Ithaca, New York, has been in circulation for 20 years, and supports the growth of the local currency movement with its Hometown Money Starter Kit.
- A 2008 study in Grand Rapids, Michigan, found that a 10% shift in market share from chain stores to independently owned stores would yield 1,600 new jobs and pump $137 million into the area.
One of the latest communities to pursue a local currency is our northern neighbor, the city of Fairfax in Marin County. The currency, called FairBucks, is being developed by the city council, the Chamber of Commerce, and the nonprofit Sustainable Fairfax. Due to the costs and administration required to start and keep a currency going, this diverse partnership of interests should provide strong support for FairBucks.
We believe that San Francisco is a natural fit for a local currency. We also believe it would be well-received by residents, given the strong interest in local food, sustainable business, and other local products. In fact, there are already local currencies springing up around the city, including Bernal Bucks and Norton Dollars; these neighborhood modes of money have been adopted in an effort to encourage spending within the city.
San Francisco has an opportunity to capitalize on this growing trend by developing a single citywide currency. We propose that the city of San Francisco form a coalition with interested civic groups to explore the feasibility of bringing a local currency to San Francisco. Reach out to the groups who have already begun work to implement these systems and support their endeavors.
Thank you for your time and consideration of this proposal. If you have any questions we would be happy to speak with you more on this topic and further explore the potential benefits of local currency for San Francisco.
Jenn Coyle and Kate Drane
Presidio Graduate School, MBA Candidates, 2011