3. Toward sustainable local development

3.1. The role of the public sector

3.1.2. The role of local government

Local government authorities are fundamental actors in the social, economic and political life of societies. Around 60% of the decisions taken at European level impact directly on local authorities at all levels, and 70-80% of European public investment initiatives are put into practice by local government authorities. This demonstrates the growing importance of local government authorities in the economy and in day-to-day life. Since 2008, however, they have had to take policy decisions to significantly reduce their budgets, while the needs of the societies on the receiving end of these cuts have not gone away. On the contrary, a growing, increasingly older population has increased demand on local authority services, especially in the social and health sectors, and local businesses have found it difficult to survive in times of austerity and unemployment, all of which has generated socioeconomic challenges for local government.

Support from public institutions for complementary currencies may be a potential solution to public budget cuts and offer a means of improving public services and policies beyond what money can buy. During the last decade, an increasingly significant number of local governments have led the way in the design and implementation of complementary currencies and addressing key socioeconomic and environmental challenges. In particular, complementary currencies have impacted on four high-priority areas for local governments:

  1. Democratization and improved service provision.
  2. Support for local economies and small and medium-sized businesses.
  3. The battle against inequality and social exclusion.
  4. And reduction of environmental impact.

In all cases, the four areas are not mutually exclusive. Currencies which improve the provision of services, for example, frequently also help to reduce social exclusion and inequality. Similarly, currencies which support local enterprise and small and medium-sized businesses also help to reduce environmental impact through the relocalization of the chains of production and distribution.

The level of involvement of local government authorities ranges from providing support to assuming the leadership of complete currency projects, as detailed below.

  • Leadership. Setting into motion a complementary currency, as leading operator as well as promotor.
  • Integration. Being involved in the project without bearing the primary responsibility for its execution, incorporating the currency into its own systems by using it to pay providers, using it for public procurement, tax collection and part-payment of local government employee salaries.
  • Association. Being on an equal footing with other organizations committed to the launch of the currency, offering expertise to help execute the project, for example, with ITC, fundraising and administrative procedures, as well as developing or investing in training, and providing help and support for evaluation procedures.
  • Sponsorship. Financially sponsoring a group or organization to develop a complementary currency project.
  • Participation. Participating in the use of the currency, without necessarily providing support or incorporating it into its own systems, but allowing people or businesses to pay for services with the currency without recirculating it, offer little-demanded services, or assume it as non-profit, all of which provides important validation for the currency, broadens the range of options for users and instils confidence in the project.
  • Support. Fully supporting use of the currency, helping to give it validity and credibility, without any direct involvement.