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Trend Summary: New forms of currency

The concept of 'money' has become seriously more diverse in recent times. Here we highlight the major developments in alternative financial currencies, including local currencies, non-monetary exchange schemes, electronic money and mobile payment solutions.

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•    Consumers are becoming increasingly comfortable trading in totally new and diverse currency denominations. The Future Foundation has indeed observed an explosion in alternative currencies which has been stimulated by a series of factors including the rise in prominence of local concerns, the digitisation of money, the mobile web revolution and the spread of cross-border commerce. And what was initially a niche phenomenon would now appear to be crossing over into the mainstream.   

•    The Future Foundation forecasts that in future, thousands of different currency systems will exist in parallel, complementing the official currency by offering tailored advantages for each niche.

•    Recent currency innovations include the introduction of several local currencies like the Brixton Pound. They are redeemable only at participating businesses in the local area and aim to boost local economic activity and ensure that money is retained within the community. Germany also now counts several micro-currencies such as the Augusta and the Havelbluete which act as legal tender within specific regions.

•    The Future Foundation also anticipates that non-monetary currencies will swell in the current political context of ‘Big Society’ living in the UK. Schemes like Freegle and the Local Exchange Trading Scheme (LETS) allow people who want to work but cannot find jobs to engage in economic activity and receive a non-financial reward for their efforts. They are designed to encourage marginalised groups to participate in the economy; indeed, old people can provide childcare and job seekers can work without endangering the receipt of social security benefits.  

•    There has also been a surge in electronic currencies in recent times. Different forms of money and pseudo money now operate on different websites, and some of them have become significant enough to be considered as currencies in their own right. Examples include Paypal (which provides a way of bypassing bank accounts and credit cards completely), in-game money like World of Warcraft gold and Facebook credits which enable users to buy premium items in some of Facebook’s top games or applications. It takes only a stretch of the imagination to project that in future, electronic currencies will be used to purchase real items and services and will become a parallel international currency.

•    Finally, several brands are experimenting with mobile payments. Ticketmaster tickets can now simply be sent to a mobile phone in the form of a barcode and displayed on a smartphone screen. Bump payments offer another mobile payment solution - by linking to a Paypal account, users can transfer funds between smartphones, set an amount and then simply ‘bump phones’. Square allows anyone with an iPhone to accept credit or debit card payments. To make a transaction, users simply enter their card number then "sign" their name using the iPhone's touchscreen.

•    Future Foundation forecasts reveal that 40% of the British population will regularly access the mobile internet by 2015. It is in this context that we project that current anxieties over the security of mobile contactless payments will have faded by this time as their use becomes more normalised.

Please click here to receive your free copy of the TrendExpress article ‘All that glisters: The changing face of money and its future fragmentation’ from our website.

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