By issuing a local currency, the North Country Notes project aims to encourage vibrant and diverse local economic activity (you can read more about the point of a local currency). The initial focus of the project will be on the Potsdam area, though the scope may expand to include more North Country communities in the future.
Local currency projects have been successful in other communities. The most notable effort is Ithaca Hours, which has been active since 1991. Though we started with the Hours model as a foundation, North Country Notes differs from Ithaca Hours in several important ways:
* NCN denominations ($1, $5, $10, $20) match US currency denominations (Hours denominations are based on fractions of labor hours, which are difficult to convert to US currency equivalents—especially when making change).
* The value of the NCN dollar is anchored to the value of the US dollar. This feature means that the NCN currency system cannot “float” in value and is not subject to its own inflation or deflation. This feature also makes currency conversion completely painless.
* NCN bills can always be exchanged back for their equivalent in US currency. Thus, there is no risk in “buying” NCN bills with US currency or in accepting NCN bills as payment for goods and services. (Hours bills generally cannot be exchanged back for US currency, placing businesses that accept Hours at risk of getting stuck with large quantities of unusable Hours bills—the upshot is that most businesses only accept partial payment in hours to reduce their risk).
These features together make NCN much easier to use than Ithaca Hours, and we hope that this ease-of-use encourages wide adoption of the NCN currency in our economy. Despite its relative success after more than ten years of circulation, Ithaca Hours has not been adopted widely enough to have a major positive impact on the Ithaca community. Thus, the Hours project can be seen as an interesting, thought-provoking experiment, but little more. We hope that the NCN project can have a much more significant impact.
Read more at North Country Notes.
PS. A friend asked “Why local currencies, what’s the point?
E. F. Schumacher argued in “Small is Beautiful: Economics as if People Mattered” that from a truly economic point of view the most rational way to produce is “from local resources, for local needs.” Jane Jacobs, one of today’s foremost scholars on regional economies, emphasizes Schumacher’s point through her analysis of a healthy region as one creating “import-replacing” industries on a continuing basis. A well-developed regional economy which produces for its own needs is possible only when control of its resources and finances lies within the region itself. At present, the ownership of land, natural resources, and industry and the determination of conditions for receiving credit have become increasingly centralized at the national level. Now all but a few large urban areas find that their economic resources are controlled from outside the area. – http://www.localcurrency.org/publications/essay_currency.html