In February, local organizers from the New Earth Exchange hope to launch a new currency in Santa Cruz—something they say could be a boon to the county’s economy and help shield Santa Cruz from big economic crises.
The as-yet-unnamed money—we’ll call it Cruz Cash for now—will exist on three levels: as physical, hard-to-counterfeit cash; as electronic funds transferable on the Internet and as a plastic card readable at participating businesses. Supporters claim it could add as much as $1 million to the local economy.
The 2007 economic crash and subsequent credit crunch were the catalysts for the idea.
“When the economic crash happened, the amount of available capital was drastically reduced,” says Langdon Roberts, lead organizer at New Earth Exchange, a group of around 20 volunteers that has the support of Think Local First, Transitions Santa Cruz and Transitions San Lorenzo Valley. “Bringing capital into the county is a big focus of city government and people who are trying to make recovery happen. A rewards system like this actually creates instant capital,” says Roberts, who also heads up the Soquel-based Center for Transformational Neurophysiology.
The money will only be good at locally owned companies and between county residents. Its primary purpose, says Roberts, is to support local businesses and put cash in the hands of people who want to work but either can’t find a job or need a micro-loan to launch a business. For Roberts, a biofeedback specialist, making health care cheaper has also been a big motivation.
Cruz Cash will join a growing list of alternative currencies in California, including Humboldt Exchange, Sand Dollars of Bolinas, Santa Barbara Community Currency, Mendicino Mula, Sonoma Rewards Dollars and the Bay Area Currency Exchange. The local money is modeled after Sonoma’s Rewards Dollars. Launched in 2007, Rewards Dollars can only be spent at locally owned businesses, thereby trapping wealth inside the wine-infused region.
Some 2,500 alternative exchange systems operate worldwide. Some, like the Bay Area’s Timebanks USA, use an hour of work as their base denomination. New York’s similarly designed Ithaca Hours are so well established that last year the local transit system began to accept them as payment.
Whether Cruz Cash is also successful largely depends on how many local businesses and residents sign up. Annual membership dues in the cooperative that will print and manage the new money will cost around $10 for individuals and $150 for businesses that make less than $100,000. Fees for large businesses are still being discussed. With their membership, each business will be given a stack of Cruz Cash, or electronic credits put in their online account. The amount will depend on each firm’s credit limit (determined primarily by size and longevity)—and it requires zero collateral. The money is initiated the moment businesses hand it out as a product discount to customers, who can spend it at any other business in the coop’s network—or in the informal economy.
The system is very similar to a rewards card. The major differences are that while ordinary rewards end up in the trash once they’ve been used, Cruz Cash will be reusable and will have a cash component.
With some 200 locals already interested in becoming members, the Cruz Cash, or “rewards,” might be spent at a restaurant or the farmers market, on plumbing, health care services or a backdoor deal. The one place it definitely can’t be spent is at a business not based in the county.
For this reason, Peter Beckmann, cofounder of Think Local First, thinks Cruz Cash could provide a big boost for locally owned companies. “It makes people focus on local spending, so the currency can definitely have an impact,” says Beckmann.
A study done in Austin, Texas by the private economic analysis firm Civic Economics found that spending $100 at a locally owned business keeps $45 circulating locally, while spending $100 at a chain only keeps $14 around town.
Despite the well-known benefits of shopping local, it’s not easy for people to pass up cheaper goods at Costco, Best Buy, Ross and the like—particularly during tough times.
Julie Kellman, owner of Seascape Foods in Aptos, says she likes the discount-based system New Earth Exchange is proposing because it adds a financial incentive to shopping local.
“Consumers have a great idea to support locals, but it’s easier to go to bigger chains,” said Kellman, who plans to sign her business up for New Earth’s cooperative. “The more we can give consumers reasons and maybe a little bit of pressure to shop local, it can benefit the whole community in general.”
NEW EARTH EXCHANGE hosts a public meeting about the proposed local currency Tuesday, Oct. 12 at 6:15 at Louden Nelson Community Center, 301 Center St, Santa Cruz. 831.476.7529.
