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Southern Finland micro-municipality to trial independent currency in 2018

Officials in the 3,000-odd-resident municipality hope that more local businesses will sign up to accept the digital currency as payment for goods and services.

Sysmä's local currency will initially be available in digital form, but a paper version is also in the works. Image: Johanna Talasterä / Yle

The Southern Finland municipality of Sysmä has plans to trial its own independent currency from the beginning of next year in a year-long project to test its future viability.

"The aim is to plan for the use of a local currency over a longer term. The real effects can only be seen after a longer period of time," said municipal manager Marketta Kitkiöjoki.

In a bid to whip up support for the pilot, Kitkiöjoki has announced that she will accept up to one-third of her monthly salary in the local tender.

She pointed out that residents should be able to use the local money to pay for items such as groceries, lunch, petrol, and hairdressing and entertainment services.

"In practice, I have thought that all of our day-to-day functions should be handled in Sysmä. It depends on how many businesses get involved, and the kinds of daily service offering that can be paid for with the local currency," Kitkiöjoki explained.

It will cost the small town in the Heinola region a grand total of 55,000 euros to roll out its own currency. The Regional Council of Päijät-Häme will advance some 38,000 euros from its regional innovation and pilot fund to help finance the project. Sysmä itself will pay the remaining 16,000-odd euros.

Local business community backs trial

The local tender will not take the form of hard cash, but will have a digital form as mobile currency. A Helsinki-based company has been charged with creating the payment format.

Residents who want to use the currency will have to login to an online service where they can purchase the desired amount of cash using an online banking connection. In return, they will receive a QR code that merchants will read when they purchase items using the local currency.

Town officials say that paper bill are also in the works, and they will work the same way that the digital money operates, except that consumers will use printed QR codes instead of a digital version.

The town is hoping that a special discount will help entice consumers to use the local currency. However local entrepreneur Harri Aaltonen, who runs a sporting goods store, said that merchants already have to grant a discount if they want people to do business locally.

"A relatively large segment of our purchasing power is used in Lahti or even in Jyväskylä. Large chains offer a wider selection as well as special offers. We can use local money to get even some of that here in this town," he remarked.

Aaltonen said that he doesn’t see any major risks in the trial. He added that the only disadvantage for the local business community would include having to possibly update readers to scan QR codes.

"Nowadays we have mobile money and Bitcoin and so on. The idea of [having] your own currency is quite fresh and interesting, that [we thought] why not get involved," he said.

For the currency to make a real breakthrough though, larger businesses need to get on board with the programme. The more the local tender circulates the more benefit it will bring to residents and business owners.

Sysmä currently has two grocery stores, one of which is a member of the K-Supermarket chain. That outlet has promised to participate in the pilot, allowing locals the option of paying for their shopping with Sysmä cash.

"We are also looking forward with great interest to seeing how this will progress from the preparatory work to the practical implementation and we will monitor what kind of impact is has on our business," declared K-Supermarket merchant Satu Niemi-Hukkala.

Small exchange rate risk

Local IT services businessman Pekka Palm will be on hand to support residents as well as entrepreneurs as the trial moves forward.

"At the moment about a dozen businesses have registers for the local currency pilot, but efforts will be made to get more involved," Palm explained.

According to the young IT entrepreneur, residents have for the most part been enthusiastic about the trial. However, he said that there has also been a great deal of scepticism.

"Entrepreneurs think one challenge will be the possible small exchange rate impact that could be associated with this. For example, if you change 100 euros, you could get 105 units of the local currency, but when you change the other way, you will lose five percent on the exchange," he pointed out.

However Palm said that he expects new converts once businesses understand the marketing potential of a local currency.

The next milestone for pilot will come on December 21, when municipal leaders will finalise arrangements for the use of the currency and vote for a name for the tender.

Entrepreneurs will also have a say in naming the currency that they will be working with for the next year, but town leaders will have veto rights over their choice, Kitkiöjöki noted.

"Suggestions for the currency name include Ransu, the Sysmä mark, Sysmämoney, Sysmä and even Väyrynen," the municipal manager revealed, referring to eurosceptic presidential election candidate Paavo Väyrynen, who has vociferously called for Finland to return to a national currency.