Hornby Island Economic Renewal Project Proposal
Report by Tony Law

“HORNBY DOLLARS”

1. What is the project?

• The project’s goal is to create a community currency for Hornby Island .
• The initial stage would involve the following tasks:

- Research community currencies already in existence
- Define goals and desired attributes for a Hornby currency
- Select the most suitable currency option
- Evaluate the costs and benefits
- Determine the level of community support
- Develop a draft business plan
- Establish an organization to undertake the project

2. How realistic is it?  

• Many communities, large and small, have currency systems
• There is the nearby successful example of Salt Spring Island
• A self-contained island community provides an ideal context
• No land or physical infrastructure is required 

3. What are its benefits?  

Depending upon what type of currency system is selected:

• keeping money on the island;
• supporting local businesses;
• promoting local buying;
• increasing local spending power;
• more fully validating work;
• increasing local trading and community sustainability
• reducing dependency on external systems;
• raising funds for community projects.

This project could be inked to others – such as a lending circle.

4. Does it have any problems?  

• success requires broad community buy-in;
• the project needs an on-going organizational capacity;
• Salt Spring’s success may not fully translate to a small community

5. Should it proceed?  

The initial stage should proceed in order to fully evaluate this project.

“HORNBY DOLLARS”

Considerations in establishing a community currency for Hornby Island

An increasing number of communities around the world are adopting community currencies as a means of increasing local control over economic resources and decreasing reliance on larger market systems. There are many forms of community currencies, three main ones being:

• Mutual credit systems
• Time-based currencies
• Backed currencies

Mutual credit systems involve keeping a central record of exchanges of goods and services, usually valued in the national currency. At anyone time, some participants have a credit amount and others have a debit amount, both carried without interest. The LETS (Local Exchange Trading System) is perhaps the best developed and most widely used. The system requires active management.

Time-based currencies involve trading goods and services based on a valuation of their worth in time. The unit can be based upon the minimum wage. Transactions are negotiable. This system allows for services involved in worthwhile community projects to be included. It therefore requires active decision-making and management. Ithaca HOURS is the best known system.

Backed currencies involve issuing a currency that is readily redeemable in goods, services or the national currency. Salt Spring Island dollars is a good example.

A community should select a currency system that suits its particular goals and its capabilities for management. It is possible to use more than one complementary currency in one community. The success of any currency is largely dependent upon people’s confidence in it.

The Salt Spring Island Monetary Foundation

One advantage of the model chosen by Salt Spring is that it generates income for the community.

Mutual credit systems and time-based currencies do not generate revenue to cover costs of operating the systems. Because the currency is not readily redeemable, buy-in can be limited or slow to achieve.

Salt Spring dollars are fully backed by Canadian dollars. SSI dollars are issued into circulation on payment of Canadian dollars, which then generate interest until they are required to redeem the SSI dollars. Each issue of currency has an expiry date (at present, two years after issue). Dollars that are not redeemed constitute a “profit” which can then be used to cover costs and to fund community projects. Non-redeemed dollars are generally currency that has been retained (mostly by visitors) as souvenirs or acquired by collectors.

After the first two years, SSI dollars have generated about $40,000. New issues are coming out every three months which will result in an expected quarterly injection of cash. There is increasing buy-in from island businesses.

Questions for Hornby Island

The population of Salt Spring Island is 10 times that of Hornby. It has 400,000 visitors a year. Do we have the resources to develop and “market” a currency system to ensure its success? Would the effort generate a worthwhile level of return? To what extent would this or other currency systems meet the social and economic goals we might set for it?

More:

May 2/05: Tony Law says (in response to somebody asking him about Lasqueti Dollars)