How One City in Spain Launched a Local Currency

During her 2015 campaign, Barcelona’s mayor Ada Colau promoted the idea of launching a local currency in her city. Colau viewed a local currency as a way of defending independent businesses and residents from rapidly-rising rents and benefits that are disproportionately reaped by corporate chains instead of local stores. Though the community currency failed to materialize in Barcelona, the city immediately to its northeast, Santa Coloma de Gramanet, created a local currency this year.

This currency — the grama — was designed to be an innovative way of enabling the city’s residents to protect their livelihoods from external economic threats, including a massive shopping center in the region. It is a digital currency, geographically-bound, designed to keep wealth circulating within the city.

So how does it work? The City Council issues gramas when it denominates portions of its public spending in it, or when public sector employees voluntarily accept a percentage of their salaries in it.

Gramas are fully backed by euros so they have the same value. They can be exchanged for euros, but users receive merchant discounts for using gramas. Importantly, each grama has a unique digital tag, allowing its duration in the system to be observed. Using this tag, a 5 percent penalty is imposed on exchanging gramas to euros before 45 days, with no exchange penalty after 45 days. These factors, though small, give users additional motivation to spend locally.

Currently, 130 business owners accept gramas and about 50,000 are in circulation. “We hope we can channel up to 450,000 euros by the end of the year in subsidies plus civil servant salaries,” Honzawa says. “We hope to end the year with 400 businesses, but the more the better.”

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