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Beyond Community Currencies: Strengthening Your Local Economy

In recent years, there has been a growing interest in Renewable Energy Communities (REC), legal entities that collectively manage energy, promoting economic, social, and environmental benefits for their community. This model of citizen management over an essential resource has been widely accepted — so could a similar principle be applied to money?

Ekhilur, a nonprofit citizen cooperative, is pioneering an innovative approach to strengthening the local economy. Instead of creating a new currency, it operates its own payment system — regulated by the Bank of Spain — to maximize the circulation of the existing euro within the community for as long as possible.

In the Basque town of Hernani in Gipuzkoa, Ekhilur has transformed the way small local businesses handle their transactions. In just over two years, the initiative has reached a sales volume of 5 million euros and more than 200,000 transactions in a community of 20,000 inhabitants, with over 1,400 users and 125 professionals.

Money: A Social Agreement We Can Optimize

Money is an essential tool in today’s market economy, but its impact on local wealth depends on how it flows and where it is concentrated. Its use is so ingrained that we rarely stop to question it. However, money is nothing more than a social agreement, meaning we can optimize it to work more beneficially for the community.

If money is quickly funneled into large platforms or financial markets, the capacity to generate employment and boost the local economy diminishes. On the other hand, if it remains in circulation within the community, it fosters the development of small businesses, strengthens financial autonomy, and multiplies economic opportunities.

How Can Money Boost The Local Economy?

Imagine money as the water of a river flowing through our town. There are two ways to make it stay longer in the area:

  • Building a dam to store water in one area (the traditional local currency model). This strategy is limited, however, as eventually the dam fills up, and the water must be released.
  • Creating channels and meanders, allowing water to flow through the community for a longer time, benefiting more people before exiting. This is Ekhilur’s strategy.

A local payment system acts like these channels, facilitating the circulation of money within the community. Instead of allowing it to leave quickly with minimal impact on the local economy, the system encourages transactions to be directed towards local businesses, strengthening small enterprises, associations, and self-employed workers.

Ekhilur not only facilitates transactions but also includes a loyalty program based on bonuses, actively involving the municipality and businesses. It also integrates local producers, promoting the circular economy by directly connecting businesses with local suppliers. As a result, an economic cycle is generated that benefits both businesses and consumers, strengthening the local market and sustainability.

A Model Of Mutual Benefit: The Key Players

For the system to work, the participation of several key actors is essential:

  • Citizens: As consumers, using the local payment system in participating businesses strengthens the community’s economic structure while also providing them with individual economic benefits.
  • Local businesses and enterprises: Accepting payments through this system fosters cooperation among local businesses and increases customer loyalty.
  • Municipalities: play a crucial role, as they can channel public spending (subsidies, aid, payments to suppliers) through the local payment network, generating a direct impact on the municipality’s economy. They can also collect municipal taxes and fees, closing some economic loops.
  • Associations: Receiving and managing funds within the community strengthens the social fabric and reinforces the solidarity economy.

In two years, this network has mobilized 6,000 euros towards local associations, demonstrating that money can generate social impact without altering its economic function.

Circulation Vs. Accumulation: The True Value Of Money

The initiative’s goal is to enhance the circulation within the community, rather than simply it from leaving. Having 10 million euros immobilized in a safe is not the same as making one million euros circulate 10 times among citizens, businesses, SMEs, and the municipality. The more money circulates within a community, the more wealth it generates and the more opportunities it creates for everyone.

The challenge is to design mechanisms that ensure this money drives productive and sustainable economic relationships. This involves strengthening local commerce, local employment, and community initiatives rather than favoring the concentration of wealth in a few hands.

Network Effect: Building An Interconnected Economy

The Ekhilur model enables different communities to connect. This generates a network effect, where each community strengthens the others, creating a decentralized structure that bolsters the local economy and makes it more resilient. By retaining more money within the community, small and medium-sized enterprises can reinvest in improvements, employment, and innovation, reducing the outflow of wealth.

Instead of imposing a top-down system, the network grows organically, allowing communities to take control of their economic development and better adapt to global challenges.

Rethinking Money To Strengthen The Real Economy

If Renewable Energy Communities have demonstrated that citizens can take control of energy, why not do the same with money? Initiatives like Ekhilur show that it is possible to improve the flow of money to generate a positive impact on the community. It’s about leveraging the current economic system’s rules to strengthen the local economy and build a more resilient, equitable, and supportive model.

Money is not wealth in itself but the tool that allows us to access goods and services. In this sense, access to money determines who can participate in the current market economy and to what extent.

A Practical Example:

  • If you have money, you can access energy, food, or housing.
  • If you don’t have money, even if these resources exist and there are enough, you cannot access them.

From this perspective, money resembles a right of access rather than a good in itself. Just as access to education or healthcare is a fundamental right in many societies, we might ask whether access to a fair and equitable means of exchange should also be considered one.

This vision does not address money’s role in creating value, only its function as a means of access to goods and services. But if money acts as the key that regulates the use of these resources, we might ask:

  • Can the design of the monetary system influence the functioning of the economy and the use of the planet’s resources?
  • Could we transform our consumption model if we redesign money and the economic dynamics it drives?

The climate and ecological crisis show us that it is not enough to change the source of energy we use; we must also rethink the economic model that defines how resources are extracted, transformed, and distributed. Perhaps a truly sustainable transition also requires (among other things) transforming money itself — shifting from a monetary system disconnected from biophysical limits to one that takes them into account.

Inspired? Here Are Some Suggestions For Next Steps:

  1. Find out more about the Ekhilur Project in this article.
  2. The Ekhilur Project is replicable and scalable. We are open to sharing the know-how acquired so far if anyone would like to replicate it. The legal aspects are very similar in all parts of the world in this area, although each country may have different characteristics. Email us here.
  3. If you’re in the area, pay a visit to the Ekhilur Project in Hernani in Gipuzkoa, Basque Country.
  4. To dive deeper into the theories and thinking behind the project, read:
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