Topical Initiative in Bristol

Just as we start lecturing on money, the BBC reports that Bristol is issuing its own currency: The Bristol Pound. The Bristol pounds, which Bristol is calling on locals to design the notes for, will be exchanged 1:1 with actual pounds (Pounds Sterling), hence operating on a fixed exchange rate system, yet will have one important, and designed, limitation - they can only be traded in Bristol.

This may sound, on the face of it, like a great local initiative, but one has to really question why this is being done, and it really begs the question of whether this will succeed. Why, if you are a Bristol trader, would you actually use these things? They have the same nominal value as a normal pound, yet you can only use them in a restricted geographical area. What happens if your suppliers are outside the local area?

The bottom line is we trade because there is a mutual benefit from doing so - both parties benefit. If someone outside the Bristol area can do something more efficiently, why not let them do it, so Bristol folk can get on with things they are good at? Why instead have Bristolians waste time and effort replicating at greater cost what others do better? Why not instead have them being innovative and thinking about new ways to add value and be creative?

Localism is an increasingly popular movement, yet it is a rather short sighted one once it loses sight of the fact that trade creates opportunity - if we all do the things we're good at, more is produced - it's not a zero sum game.