ESCI-UPF Research

REC: Boosting Local Economy with Complementary Currencies

  • 19/06/2023
  • 1 min reading time
Complementary Currencies Study
Photo: Freepik (pch.vector)

ESCI-UPF professors Mercè Roca, Jordi Puig and Marta Segura, along with UOC professor Susana Martín, have published their study of the local multiplier impact of the REC currency in Barcelona in the prestigious Urban Studies Journal.

At the forefront of ‘new-municipalism’, a grassroots movement for social and economic reform, Barcelona is taking innovative steps to re-localize wealth creation and tighten control over capital flows. Among the city’s groundbreaking initiatives is the REC, a complementary currency developed under the B-MINCOME program for supporting disadvantaged neighborhoods.

The core concept, dubbed the ‘urban economy as a leaky bucket’, suggests that resources often drain out of local economies due to forces of capitalism and globalization. Complementary currencies like REC aim to plug these leaks, stimulating and reorienting economic activities at a local level.

The research led by Mercè Roca, Jordi Puig, Marta Segura, and Susana Martín, delves into the impact of income support payments made in this complementary currency. The study compares the local effects of income support payments provided by the Barcelona City Council in euros and in REC.

The findings are compelling. After 13 months of circulation, REC demonstrated a greater local multiplier than payments in euros. While payments in euros achieved a Local Multiplier (LM3) of 1.94 in Eix Besòs, signifying a rate of local circulation retention of 6.21%, the LM3 multiplier for payments in RECs was 2.09, with a local retention rate of 21.79%. Furthermore, the weighed cumulative local multiplier reached an impressive 2.95, accounting for all exchanges generated by the REC.

The study not only demonstrates the potential of complementary currencies to amplify the local impact of public expenditure, but also presents a new methodology for evaluating such public policies. This goes beyond theory, bringing concrete empirical evidence that underscores the power of grassroots initiatives in reshaping our economic landscape.

The research published in Urban Studies Journal sheds light on the potential of such initiatives to stimulate local economies, foster social inclusion, and enhance urban resilience. These findings have broader implications for urban planning and policy development, demonstrating the value of complementary currencies as a tool for sustainable and inclusive urban development.

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