Cities and currencies

Ethereum inventor Vitalik Buterin recently wrote that while many national governments are “inefficient and slow-moving” in adjusting to changes in the needs of populations (and, I might add, environments), cities and states have the potential to deliver much more flexible and dynamic responses. Vitalik focused in particular on cities, observing that there are great cultural differences between cities and therefore it is easier “to find a single city where there is public interest in adopting any particular radical idea” than it is to find, or convince, whole nations.

This is a fascinating perspective, and one that I have much sympathy for. In  “Before Babylon, Beyond Bitcoin” I suggested that the multiple monies of the future will be linked to the multiple communities we will inhabit and that there were reasons for thinking that the city identity might well turn out to be the most important. I remember reflecting on Dan Hill’s perspective that Europe has functioned via urban centres for much, much longer than it has functioned as a collection of nation states and that (as in so many other ways) the money of the future is going to look more like the money of the past.

Cities as well as being the focus for economies and economic growth are above all physical locations and, as I recall the futurist Gill Ringland suggesting in her financial services scenarios for 2050, the ability to enter, do business and to reside in desirable cities will become a valuable right and the basis for one of a number of demographic asset classes. There was an illuminating Financial Services Club discussion about this in London last year, where the even more expansive view that cities might begin to dictate the policies and trajectories of the nation state was put forward.

In this context, Gill’s prescient narrative of the C50 (the organisation of the 50 richest city-states that will replace the G20 as the mechanism for “managing” the world economy), forms a solid narrative around the future economic organisation of a successful, functional world. As the respected commentator Martin Wolf wrote in the Financial Times some years ago, “this is the age of cities, not of national economies” (and he want on to say that “it is high time London became a true city state”).

These ideas have been around for a while. In the Havas “14 trends for 2014” Marian Salzman wrote about post-nationalism, countries breaking up and London becoming independent from the UK. These views may have seemed fanciful to readers then, or indeed now, but I am not so sure they can be easily dismissed. CityCoins, which is a startup backed by Balaji Srinivasan and others, is launching MiamiCoin, a token that raises money for the city while allowing its holders to earn mining and staking fees. Similarly, New York City is about to get an NYCCoin as part of Mayor-Elect Eric Adams plan to transform the city into a cryptocurrency hub.

Some crypto billionaires want to go even further and create their own cities (in, for example, Nevada) but the link between cities and currencies is not confined to rich first world enclaves. The noted rapper Akon is about to begin building another crypto city in Africa. He already started work on a city in Senegal and the new one will be in Uganda. Both of these cities will run on Stellar rails using the “Akion” cryptocurrency. Inhabitants will buy goods and services using AKoins, which will form the basis of the cities economies. He is planning to use a solar power plant to make green energy central to the developments.

(Akoin has recently launched a debit card with Baanx that will allow worldwide payments. Lynn Liss, co-founder of Akoin said that this partnership will bring new players into the marketplace and “give millions of people access to crypto, and access to a global network of merchants offering goods and services”. That’s life changing, and a positive step forward for crypto use. During a recent trip to Malta, Akon himself made the first payment using the new card.)

Cryptoassets and token trading aside, there are already communities beginning to experiment in this way. Last year, for example, in virus-ravaged Italy the town of Castellino del Biferno in southern Italy’s Molise region started to issue its own money (the “Ducati”), redeemable at local merchants only, with a 100% reserve in euros. This money (strictly speaking, a “currency board” rather than a “currency”) was intended to keep value circulating within the local economy but there’s no reason why an actual local currency might not circulate over a wider area. In the north of Italy, to continue with this particular theme, anti-euro Lega nationalists and the alt-Left Five Star Movement were at one time planning to go around the euro and create a rival payment structure based on ‘IOU’ notes (a course of action I may accidentally helped to stimulate).

Is Vitalik on to something? I think he is. Would such competing city currencies really be a big problem? If I live in London and use London Loot for the train, for lunch and at the supermarket, is it such a big deal to convert it to Chicago Cabbage or Bronx Bucks to buy something online? Especially when your phone does it for you and an AI f/x bot is vigilant on your behalf to get the best prices? I don’t think so.

A world economy built up from cities and their hinterlands would obviously demand different financial services and institutions from one based on national economies and while you may think that the idea of Bay Area Bread or Lagos Lolly sounds a little far-fetched, please be assured that I am not the only one who thinks the future will be more city-centric as city centres revive in the inter-pandemic new normal environment.

This was foreseen by the wonderful Jane Jacobs’ in her book “Cities and the Wealth of Nations” that was published way back in 1984. Personally, my Jacobs-influenced city-centric perspective was reinforced when I happened to read a Canvas8 report “The city an an identity anchor” (which echoed Gill’s points about identity) and the World Economic Forum (WEF) 2017 report “Cities, not nation states, will determine our future survival“. The first C50 meeting can’t be that far away and I’m sure that money will be on the agenda.

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