What are BerkShares
BerkShares are a currency only accepted by local businesses in the Berkshires, a region in western Massachusetts. BerkShares, which come in paper bill denominations of 1, 5, 10, 20 and 50, are part of an initiative to encourage consumers to shop locally. Consumers can exchange U.S. dollars for BerkShares at 16 branches of four community banks, and more than 400 local merchants accept the currency.
BREAKING DOWN BerkShares
One way that BerkShares encourage consumers to shop locally is by providing an effective discount of 5% on purchases. A consumer only needs to exchange 95 cents at the bank to receive $1 in BerkShares. Stores accept BerkShares at full face value, so a customer who wanted to by a $10 item would effectively pay $9.50 if they paid in BerkShares.
BerkShares were first issued in 2006 and follow a tradition of experimentation with local currency in the Berkshires region. Local farms and other businesses have offered their own currencies on a very small scale as a form of short-term financing that encouraged community investment. BerkShares were created as part of a larger movement to encourage economic self-sufficiency in the town of Great Barrington and the rest of Berkshire County by sourcing materials locally and keeping local dollars in the community.
BerkShares are issued by BerkShares, Inc., a non-profit organization dedicated to community development. The formation of BerkShares was modeled on the usage of local currencies during the 1900s and the currency seeks to distinguish and promote local businesses who support the community by accepting the currency.
Legality and Motivation for BerkShares
The production and usage of local currency is permitted in the U.S. under certain restrictions. The currency must be paper-based rather than coins and cannot bear close resemblance to dollars. Merchants or other recipients of local currency as a form of income must pay tax on that income. In addition to BerkShares, local currencies have been offered over the last decade in communities in California, Wisconsin, Oregon, Pennsylvania. New York and Michigan.
The catalyst for the creation of local currencies is often national economic distress. Many local currencies were created when the dollar declined sharply in value during the Great Depression while the Great Recession in 2008 spurred the creation of local currencies as credit became harder to obtain.
BerkShares, Inc. have used the local currency as part of a broader program to promote the local Berkshire economy that includes entrepreneurship and economic training as well as internship programs.