Over recent years local authorities have begun to borrow more heavily from banks at interest. A lot of this new money is going to come from overseas.
There is no reason why local authorities should pay interest to privately owned banks who create money. Through banks which they own they should be able to create their own currencies. When Bruce Beetham was Mayor of Hamilton he gained considerable support for issuing rates vouchers. A portion of the wages of workers would be paid in rates vouchers which would then circulate in Hamilton and be good for payment of rates.
As with currencies created at other levels of organisation, it is important that the right amount of currency is created. In negotiation with the Reserve Bank and with those who create more localised currencies, local authorities should have a special body which monitors the amount of currency put into circulation.
These currencies could be spent into existence, bought with national dollars or by lending them into existence with a negative interest rate. The local authority currency would be larger than time banking or LETS or other currencies, so it is important that this is very different from the national currency. It should be a currency only for spending and, because it would have a negative interest rate of 8-10% a year, it would be spent quickly. This will change the whole pattern of spending and people in possession of such a currency will tend to spend it on long term investments. Paraodoxically instead of fostering consumerism, it fosters long term investment in a sustainable business.
Because a local authority issued currency has to be digital to be useful and legal, there would have to be a bank associated with each local authority where people could open accounts. We plan that such currencies will be created to circulate faster than the national currency and will not attract interest, the bank must be owned by the Council and create rates vouchers acceptable for the payment of rates. The arms length relationship between Council and the local currency will be a protection against cronyism, corruption and inflation.