A New Currency For Stroud?

I never thought I'd find myself writing against the idea of a local currency.

I grew up hearing wistful stories of LETS systems, from parents who traded washers with their friends as a token for babysitting duties. And who could fail to love the idea of bartering skills and products in a local market?

So please, understand that I want to support the idea of a currency for Stroud. But so far I've read only positive coverage of Transition Stroud's proposal, and yet there are aspects of the idea which trouble me deeply, which I think could benefit from a little discussion.

One particularly interesting feature is the proposal that the new currency should lose a percentage of its value every six months, something quaintly called demurrage.

Compared to normal currency, this is the equivalent of having a negative interest rate on your savings, yet not being able to take your money out of the bank to preserve its value. Except of course you can - you can cash your local currency in for Sterling (losing 3%) and buy it back if you ever want it again in future. If you were going to hold on to it for more than one 'cycle' of demurrage it would make sense to do this, which would discourage saving up (and consequently, probably rule out the use of local currency for larger purchases or projects).

The stated purpose of demurrage is to encourage money to be spent quickly rather than saved. As a lifelong 'saver' rather than 'spender' this feels odd, but I'm open to persuasion; of course there are things like food that we have to buy every week.

But demurrage, combined with the 3% 'get out' fee, basically means that once you put your money in to Stroud currency you'll never quite get it back again. Where is the extra money going? Towards admin costs for the scheme, and "other Transition Stroud projects". Which is all very admirable, but then isn't it equivalently a charitable donation, minus the possibility of gift-aid or tax deduction?

Also, I can foresee a kind of 'hot potato' game towards the end of the validity period, where everyone tries not to be the one left holding the money at the moment it expires. Either the notes will all have the same validity date (in which case this will be a massive game every six months) or I'd have to keep notes in my wallet sorted by expiry date, to make sure I first spend the ones which are about to go out of date. And, equally importantly, I'd feel massively guilty about playing these games (though game theory says that I must, because everyone else will do).

For local businesses which may already be struggling in the face of the recession, this looks like just another way to lose money (on top of taxes, which under current taxation laws would still be payable on local currency transactions). As a business, the only reason for accepting local currency is if you believe you'll get more business by doing so.

And the thing is, as a consumer, I'm a responsible adult. I can decide for myself that, where possible, I'd like to support local goods & services. I don't need a special currency that I can only spend here, to help me spend my money closer to home. And I'm especially averse to the idea of having to pay for the privilege.

I like the idea of local currencies, but where's the incentive to use this one?

If you're interested in reading more, this article from October '08 (on the Transition Stroud site) describes how the proposed currency would be run, based on the Chiemgauer in Germany.