"“When people think of Brixton, too many think of gangs, drugs, and riots. We’re trying to turn that notion on its head.” That’s what Tom Shakhli, the general manager of the Brixton Pound, told me when I visited the team office at Lambeth Town Hall. A storied district in the middle of South London, Brixton is indeed an atypical home for a thriving local currency. As Tom notes, other local currencies in the U.K. are succeeding in suburban neighborhoods full of “hippies.” By contrast, the 5-year-old Brixton Pound is humming in one of the U.K.’s most diverse and dynamic neighborhoods, the heart of Black Britain, heavily hit by the recession.
Unlike Bitcoin, the Brixton Pound is a “complementary currency”: It’s not meant to subvert the national currency nor dethrone pounds sterling. Indeed, the Brixton Pound is officially both pegged and backed by pounds sterling at a 1:1 ratio. There is no issuer, per se. Rather, residents can exchange £ for B£ at various shops and public places across the neighborhood. Because the Brixton Pound organization isn't making loans, the U.K. Financial Conduct Authority treats the currency as a “voucher scheme,” and thus the team avoids entanglement in the legal morass that plagues small lenders and other financial services providers.
At this stage, the goal of the Brixton Pound isn't credit or value creation. So why use it? When the Brixton Pound launched, one economist accused the project of “not achieving anything meaningful” and interfering with already-existing existing incentives to buy cheap goods from outside Brixton. Admittedly, the main reason to use the Brixton Pound is precisely because it empowers local businesses and traders in the neighborhood, 40 percent of which now accept the currency, Shakhli told me. Since you can only spend Brixton Pounds in Brixton, the currency stays around, at least until it is exchanged, maintaining the vibrancy of the neighborhood's world-famous markets and entrepreneurs. Some government employees receive portions of their salaries in electronic Brixton Pounds.
“We don’t want to be part of Clonetown Britain,” Shakhli and his team of employees and volunteers are fond of saying. That is, they don’t want people to get off the Underground and run into the same fast-food joints and convenience stores that pop up in most other London neighborhoods. This is clearly a sentiment shared by many local businesses. In fact, many of them now offer discounts simply for using B£ instead of £. In return, they receive free advertising from the Brixton Pound organization, in addition to other benefits.
One of those perks is that it’s incredibly convenient. In 2011, the Brixton Pound followed the model of several services in sub-Saharan Africa by adopting pay-by-text—Shakhli estimates that 95 percent of transactions now occur with e-currency via SMS. The businesses pay lower transaction fees for this service than they normally do to debit card and credit card providers. The fees are then collected and pooled in a micro-grant scheme—money that will soon be reinvested in the community.
Without a doubt, the paper version of the Brixton Pound looks amazing: With pictures of locals like black feminist activist Olive Morris, the Miami Heat’s Luol Deng, and David Bowie, it’s the coolest currency I’ve ever seen. But texting is as easy as using a credit card, with lower fees, so many people go for the digital option.
As for security and privacy, the Brixton Pound stacks up fairly well. The paper currency contains similar security features to pounds sterling, which help prevent counterfeiting. Furthermore, when you exchange sterling for Brixton Pounds, the sterling goes into a local credit union, which is not only far more likely to lend to small businesses than a conventional bank, but succeeds at the expense of predatory and invasive payday lenders, which are becoming increasingly ubiquitous in low-income London. On a macro level, as the link between the Brixton Pound and the local credit union is strengthened, it is less likely that the pounds of Brixton residents will be subject to the hazards and punishment that come from dealing with unseemly lenders.
At this stage, the Brixton Pound is working for local economic empowerment. Shakhli says the currency succeeds because it is easily understood. The local government also supports it—indeed, some government employees receive portions of their salaries in electronic Brixton Pounds, and some business pay local taxes with them.
The future of the Brixton Pound may become more complicated: they plan to get their first ATM soon, thus stepping further into the realm of more traditional financial services providers. But, for now at least, Shakhli can confidently say that the Brixton Pound is both helping the neighborhood and encouraging people to reflect on crucial modern questions: “What is money, anyway? Where does it come from?” (http://www.yesmagazine.org/commonomics/alternative-currencies-bigger-than-bitcoin-bangla-pesa-brixton)