How the Totnes Pound works

<h3>Totnes Pounds enter circulation when people choose to exchnage their sterling currenyc into Totnes pounds at one of four places around Totnes. At present the exchange rate is 1TP for £1.</h3><br /><p>Totnes Pounds can then be spent at participating businesses, of which there are currently around 70. Some of these are now offering discounts for certain purchases that are made in Totnes Pound to encourage usage.</p><p>People can exchange their Sterling into Totnes Pounds at a number of <a href="/totnespound/issuingpoints" target="_blank">issuing points </a>around Totnes. People can also accept Totnes Pounds in change from participating shops. This does not create new pounds, but does help them to circulate and enables shoppers to show their loyalty to the local economy.</p><p>Every Totnes Pound in circualtion is therefore 'backed' by one pound of Sterling. This money is put into a bank account.</p><p>Totnes Pounds then circulate between consumers and businesses. Some businesses spend the Totnes Pounds that they receive with other local businesses. This strengthens the <a href="http://en.wikipedia.org/wiki/Multiplier_effect" target="_blank">local economic multiplier</a>, which means basically that money stays within the community rather than leaking out. If a business has a excess of Totnes Pounds they are able to exchange the surplus back for Sterling.</p><div><img src="/sites/default/files/images/asset%20diagram.img_assist_custom.JPG" class="image image-img_assist_custom" border="0" height="207" width="400" /> </div> <p>&nbsp;</p><p>At the moment the project is managed by an unincorporated community association. However, the project team have been working with Co-ops UK to set up an Industrial and Provident society which will be the long term vehicle for managing the currency. This will ensure that the project is owned by the local community and run for its benefit. </p><p>Businesses that accumulate an excess of Totnes Pounds are able to exchange them back for sterling. However, we encourage them to think about how they can spend them themselves, to strengthen the 'local multiplier' and build new relationships. </p><p>In the longer term we plan to diversify the asset which backs the currency. In future it might be possible to back it with land, energy or labour. At this point the currency will be able to play an even more significant role in building economic resilience. </p>