French City of Nantes becomes Europe’s First Major City to Experiment with a Virtual Currency – Where is this Trend Leading?

This city in western French is getting ready to launch its own local currency as a complement to the euro. Though Nantes is following the example of the WIR cooperative bank in Basel, Switzerland, where 60,000 small and medium-sized enterprises are already using a cashless payment system, this will be the first time a large-scale European city is willing to try the experiment with both businesses and individuals.

The measure addresses the increasing importance of non-monetary exchanges between firms, a tendency that is particularly visible in times of financial crisis. By the summer of 2013, businesses that have signed-up for this system will be able to pay or be paid in currency units already nicknamed “Nanto.”

Firms won’t be able to amass Nantos or to cash them in, and there will be a system of penalties – for companies over a certain negative or positive fixed limit, as the objective is to converge towards a balanced budget. Nantos that aren’t spent can be used to finance non-profit organizations.

One of the main goals of the system is to accelerate trade between local companies. Members of the “Nanto zone” will be able to limit the use of cash, thereby reducing cash flow problems and making exchanges easier.

Nantos respond primarily to the needs of small and medium-sized businesses in the services, construction or restoration. The city intends to put public transport companies, car parks and after-school programs in the loop. Contrary to the Swiss WIR bank that limited its action to businesses, Nantes also wants to include individuals in its system, who could then receive additional remuneration and bonuses in Nanto.

Read the full story in French by Emmanuel Guimard