Let’s boost the local economy!

Besides the four active policies (social and labour inclusion policies) and the passive cash policy (Municipal Inclusion Support) implemented by the B-MINCOME pilot, the project has also introduced a new digital currency – the real Economy Currency, or REC. Initially implemented exclusively in the pilot area and only designed for B-MINCOME recipients, the aim now is to extend it to the whole city, once the B-MINCOME pilot is finished.

The B-MINCOME pilot planned from the very beginning that 25% of the Municipal Inclusion Support (SMI or cash transfer benefit) for those recipients receiving more than €100 a month would be paid in RECs – the new citizen currency. The REC is a citizen exchange system that complements the euro and allows transactions to take place within the community of individuals, institutions and local businesses of the ten participating neighbourhoods. REC users can carry out any kind of transaction, including paying at local shops; receiving charge-free payments from other customers, remotely or in person; sending money to others with no additional or transaction costs, etc. In addition, businesses can create special offers or discounts on particular products since they appear on an interactive map in the REC mobile app that users have to download. 
Initially, the REC was only designed to be used in the Eix Besòs (Besòs Axis) businesses and shops of those ten neighbourhoods that accept this new mode of payment. Supermarket chains and commercial franchises are excluded, as explained below. Since September 2018, the REC has been paid to around 500 B-MINCOME recipients, a number which is expected to increase before the pilot is finished. Currently, 27% of these 500 users are men and 72% women, while 36% are in their thirties and 32% in their forties. Forty-three percent have completed secondary education, while 11% have completed tertiary education. The main goal of the REC within the B-MINCOME pilot is to enable part of the SMI payments to remain and recirculate within the pilot area in order to boost the local economy, local relationships (among neighbours, sellers, consumers, etc.) and the socio-economic dynamics of the ten neighbourhoods, as the following picture shows:

Design and implementation
NOVACT, the International Institute for Nonviolent Action, is the organization in charge of designing this new currency as part of the B-MINCOME pilot. However, its horizon extends far beyond the project since their idea is to continue using the REC after the B-MINCOME pilot ends and even outside the ten neighbourhoods involved in the project, reaching the whole city. The aim, therefore, is to make the REC the future currency of Barcelona’s citizens. So far, NOVACT has designed and completed the first three stages of REC implementation: 1) to define a monetary, legal and technological model for this new currency; 2) to design an advertising campaign to publicise the REC among the pilot area’s inhabitants; 3) to socialize this new currency before starting the campaign among the economic stakeholders (small businesses, local traders, municipal markets, etc.). 
Following the successful implementation of these first three stages, NOVACT have also designed a further four of which the first three have already been developed and the last is being developed right now, namely: 4) to create the REC’s governing board comprising various citizen organizations, NGOs, social platforms, local traders’ associations and other municipal stakeholders; 5) to pay 25% of the SMI to those B-MINCOME recipients who receive more than €100 per month; 6) to develop more activities to promote and advertise the REC, particularly focused on attracting and encouraging new local businesses to accept the new currency; 7) to evaluate the REC’s economic and social results (multiplier effect, reuse rate, speed and circulation flow, etc.). In order to better appreciate the importance of this last stage, some additional data is being collected, as explained below.

Background information
To evaluate the results achieved during the four months of REC implementation, some prior analysis of the economic situation in the area and of the REC recipients was required. Municipal social assistance recipients in the Eix Besòs area received around €4.1 million in 2016 through different mechanisms (rent subsidies, direct financial support for emergency situations, child benefits, etc.). Around 25% of this amount, €1,041,718, was spent in local businesses and shops, of which 19.5%, or €202,706.90, remained in the area. The other 75% (€3,086,846) was spent in supermarket chains and commercial franchises, of which just 3% (€90,000) remains in the area. That means by far the biggest part of municipal cash benefits do not benefit the neighbourhoods, nor do they boost the local economy or local businesses.
It was therefore necessary to design a mechanism to promote local economies and commercial activity in the neighbourhoods, with the goal of ensuring that at least a larger part of municipal cash benefits going to the Eix Besós remain in that area and contribute not only to directly reinforcing the beneficiaries’ well-being but also indirectly by improving the whole area.

Results obtained
Given this situation, the introduction of the REC seems to be serving as a catalyst for positive changes throughout the Besós Axis. On the one hand, on an individual level: there are 509 REC users among B-MINCOME recipients with around 273,000 REC in their bank accounts. These were the first users but anyone interested in using REC can download the app and buy, sell or exchange them for euros or vice versa.
On the other hand, there is also an area dimension: there is now a flow of 206,330 REC across the area and spending in local shops and businesses has increased by 74% (or 25,000 REC) in just the four first months of circulation. Each of the 170 shops and business that accept this currency receive 1,606 REC a month on average and, as a whole, they have earned around 200,000 in these first period. REC recirculation (that is, REC spending by local businesses) is estimated at about 2,375 a month and it is increasingly being used between local businesses and their suppliers. A survey recently conducted by NOVACT among some of these traders has shown that 95.3% of them have increased their customer numbers thanks to the REC introduction, which means that their sales have also increased, as the following graph shows:

The PUMAS in Seville (Spain), the Bristol Pound (England), the SoNantes and the Sol-Violette in Nantes and Toulouse (France), or the Grama in Santa Coloma de Gramanet (Spain) are just a few examples of local or social currencies. Barcelona’s REC is now on the list of more than 5,000 local currencies around the world. If you want to know more about it, take a look at: www.rec.barcelona