by Lukas Valentin Graf
A foggy winter morning is dawning. To wake up (and get through the upcoming lecture), you grab a hot drink at your favourite café. As usual, you reach for your wallet to pay and suddenly rub your sleepy eyes: did the barista just tell you to pay in “LEU” and not in Swiss francs? Astonished, you ask what “LEU” even is and learn that it is Zurich’s new community currency.
This seemingly fictional scenario (okay, there’s some truth to the sleepiness) may soon become reality in Zurich. The LEU, a digital community-based currency, actually exists and the first shops in downtown Zurich are accepting payments in this currency. The Leu is named after the lion in Zurich’s city coat of arms and should not be confused with the official currency of the Republic of Romania, which bears the same name (leu is Romanian for lion). The Leu is a community currency establishing a complement or extension to official currencies such as the Swiss franc.
Why digital over bill and coin?
Complementary currencies, unlike conventional ones (also known as fiat money), are not issued by states or commercial banks. However, this is the only common denominator of the new alternative currencies: For example, global cryptocurrencies such as Bitcoin or Ethereum are just as much alternative currencies as local initiatives such as the Leu in Zurich or the “Chiemgauer” in Upper Bavaria. Likewise, some alternative monetary systems are completely decentralised and built in so-called peer-to-peer networks, while other currencies are more like classic monetary systems with a central authority. Also, alternative forms of money do not always have to include money as such, but also barter or the offering of labour in exchange for a service or good. Many alternative currencies also have a strong digital connection and rely on blockchain technology to store all transactions ever made in a transparent and forgery-proof public ledger. Using a blockchain ensures decentralisation and conquers the idea that money is issued by just a single player. The Leu is based on a blockchain where the development and associated framework used exclusively open-source technology.
The Encointer association and financial inclusivity
The special thing about the Leu is not so much that it is a digital currency (i.e., there are neither notes nor coins), but the values, as Malik El Bay from the Encointer association, which provides the technology used by Leu, points out. According to Malik, it is important not only to give access to a monetary system, but also the means – i.e., money – to participate. This would also allow participation in the financial system from those unable to open a regular bank account, for example due to lack of papers or residence permits. The vision behind the Leu is to create an almost unconditional income, say Malik and his colleague Gesa Feldhusen from Encointer. In this way, it would be possible for the socially disadvantaged to participate financially in the local economy, for example, by visiting a café or consuming local products. The focus on Zurich also ensures that local value chains are supported. Everyone who contributes to the Leu community in the context of so-called cycles receives a fixed amount of LEU 44.00 per meeting, which takes place every ten days. Thus, no action must be taken to obtain the currency, except to be physically present at the gatherings. These gatherings are also a good opportunity to get to know other people and benefit from the community-oriented approach, as Gesa highlights. The combination of social and community aspects is arguably a paradigm shift and distinguishes the Leu significantly from existing alternative currencies, as Malik explains. Accumulation or speculation does not make sense with LEU – in contrast to currencies such as Bitcoin. The Leu loses 5.6% of its value every month. This serves to keep the money supply stable and motivate users to actually spend their money and thus support the local economy.
The LEU is slowly adapted
Currently, there are about 1 000 accounts registered in the app as a part of the Leu community in Zurich, says Gesa. Considering the population of Zurich (421 878 inhabitants by the end of 2020), that is still very few. However, as she explains, these users are very pro-active. Some of them now offer services such as yoga classes that are paid for with LEU. Leu users also approach shops and restaurants in their neighbourhoods and ask about the possibility of paying with LEU. For the businesses, the expense is low anyway, Malik adds. Paying with digital systems such as Twint has become a matter of course and the additional effort to accept payments in LEU is therefore rather low. Nevertheless, it takes time to introduce a new local currency: At the beginning, there is the transfer of knowledge, i.e., people first have to learn what the Leu is and how to use it. Another important aspect that takes time is the creation of trust and acceptance of the community currency. There are also other Encointer communities outside of Zurich: In October 2022, the “Aslah” was launched in the city of Kigali, the capital of Rwanda. In Berlin and Greenbay (US state of Washington), initiatives are underway to establish local community-based currencies using Encointer technology. If things continue, there could soon be a global network of local currencies, Malik and Gesa confidently state.
How can you take part?
If you too would like to pay for your coffee with LEU from here on out, there are several ways to take action. A good starting point is the Leu website (leu.zuerich), where all important information is listed, for example how to install the required wallet on your smartphone and where to get your very first Leu from. The next Leu gatherings will take place on 19 and 29 December and 8 January and after that always in a 10-day rhythm. In addition, there are regular community meetings, “LEUträffs”, where current questions on financial and social topics are discussed. The next ones will take place on 13 December and 23 January. So the question of whether you want to pay with LEU might not jolt you out of your morning reverie in the future, as you and your fellow students could be part of the local currency community.
Lukas Valentin Graf, 26,
PhD student in agricultural science, has recently
received the first Leu in his digital wallet and
looks forward to spend it on his morning coffees