Jerusalem Joins the Local Money Movement With Special 'Lira'

The young economists behind the Jerusalem lira believe their virtual currency can reduce users’ expenses while increasing personal income and social cohesion.

Avihai Rosenberg (left) and Tomer Bariach, the founders of the Jerusalem lira, in Jerusalem. Both men are dressed casually, Rosenberg all in black and Bariach in beige pants and a purple T-shirt, and both have a full beard and mustache.
Olivier Fitoussi

Tomer Bariach and Avihai Rosenberg, the founders of the Jerusalem lira, want people to know that they are not a couple of altruists and their complementary currency is not just another community project by well-intentioned but naive young people. “We don’t want to be seen as a cute project,” they say during our conversation in a busy Jerusalem cafe.

“The goal is for every Jerusalemite to understand how using the lira can help them, and that the more liras they have, the more goods they can buy, and cheaply. There is a clear personal financial interest here, from which comes the communal interest — and everyone profits,” says Rosenberg.

The Jerusalem lira was launched in mid-March, after two years of preparations. A virtual, complementary currency, the lira is used to trade goods and services on the currency’s (Hebrew) website with other group members and on Facebook. It is based on local secondhand and barter groups that have become very popular on social media.

The lira is not intended to replace the shekel but rather to trade alongside it. The goal is to enable community members to increase their (shekel) revenue, in the case of sellers, and to reduce their expenses, in the case of buyers, while strengthening the economic links between individuals and local small businesses.

I’m a regular, salaried employee. I shop in the big discount supermarket chains and order goods from the Chinese online marketplace AliExpress. What do I need this community headache for?

Rosenberg: “First of all, you get free liras. What do you care? You signed up for the site, you got 60 liras. Then you went out to a bar and had two beers for 15 shekels (almost $3.75) and 15 liras, instead of 30 shekels. The bar is a local business, you won’t go to China for it. And then you said to yourself: ‘I saved money and I helped the owner, but now I want to earn more liras so I can continue to save money.’ So then you think about what you can offer the community in order to get more liras — selling furniture and household goods at home, offering lessons from yoga to math, or professional services such as legal advice or computer repairs. You put an ad on the site, offer a product; you get a free advertising platform and also increase demand, because your product is cheaper. The seller determines the proportion of the purchase price he wants to receive in liras. The usual range is from 30% to 50%, so that means purchasing in shekels through the system is cheaper than anywhere else.”

Swimming against the tide

Bariach and Rosenberg, are both 28 and they each majored in economics at the Hebrew University of Jerusalem, generally considered a springboard to the Finance Ministry and the Bank of Israel. Instead of going for a job in government or in a big corporation, as many of their friends did, they decided to swim against the tide. Bariach says they felt during their studies that the economic system was clumsy and did not serve them.

“As the economy becomes more global and economic competition increases, we see a drop in prices. This is really economic efficiency. But this efficiency damages interpersonal trade. We want to better and improve the efficiency of local economic conduct, an important niche that has been forgotten in contemporary economics. Free trade is conducted not just between nations, but within the community too,” Bariach says.

“Reducing trade between people increases social alienation and misses great economic potential. You see people who have so much to offer, and on the other side people who would be happy to receive what they have to offer, but the resources aren’t exploited properly. We can conduct ourselves economically within the community in a much more efficient way,” Bariach says.

During the development process, Arie Ben David, an educator, artist, social entrepreneur and one of the leaders of the sustainability field in Israel, joined the initiative.

Mutual aid

Life in Jerusalem clearly reflects the problems that Bariach and Rosenberg describe and how the new lira could help solve some of these problems. The poorest city in Israel by some measures, Jerusalem suffers economically from outward migration of more-advantaged residents, and many businesses find it difficult to survive over the long term. At the same time, there are a number of strong community organizations, such as the city-sponsored neighborhood governments in every neighborhood, as well as a widespread network of charities and nonprofit organizations. “We tried to find an economic solution, but not one in which we provide help such as with a charity, but with people from the community helping each other,” said Rosenberg.

The first of the two main goals of the project are to make information accessible within the community: to provide businesses, professionals and private individuals in Jerusalem with another platform to offer their wares to the community they live. The link between people in itself will raise the amount of trade within the community and increase the economic efficiency of the existing resources, says Bariach.

The second part is the creation of the local currency, which enables greater purchasing power within the community.

“This currency cannot serve people for anything but trade. It is impossible to buy a home with it, it is impossible to buy stocks with it, it is impossible to invest it in the bank, and no one owes it to anyone. It is only for purposes of trade — this money does not make money,” says Rosenberg.

“It has great economic importance. With 100 liras the only thing you can do is spend the money within the community, and that is how to create much greater trade within [the community].”

The Jerusalem lira joins a new and sophisticated generation of local currencies around the world. Last year we wrote about Ithacash, a local currency in the city of Ithaca, New York. Many similar local currencies are proliferating in California. Even in Europe, despite the various economic crises, online social currencies are a growing phenomena, with the European Union’s D-CENT project the best known and most advanced, intended to for creating digital tools for empowering local communities.

Localization is big thing in online trade today, says Bariach. “The two strongest trading spaces on the [Israeli] internet are Yad2 [a secondhand sales site] and local Facebook groups. But Facebook is not adapted to a trading system, and we want to solve that,” he added.

The rise of local currencies is mostly a product of technological advances, a mix of smartphones and applications with the unlimited and immediate possibilities of collaboration on the internet. Today, anyone can set up a local currency without any financial institution behind them or big investors, without a need for permits and bureaucratic procedures that serve as barriers to entry into the financial system. This trend picked up in the wake of the global financial crisis, which in addition to the problems of inequality and unemployment in countries such as Spain and Greece, also led to a crisis of trust between the public, governments and banks.

“The original idea of the lira began because of the social protests [of the summer of 2011], but we did not want to develop something as an act of protest, but to create change with our own hands,” says Bariach. “We looked for a way to affect the economy and society without asking for help from the decision makers, and without presenting the decision makers with a list of demands and telling them ‘this is how it needs to be done,’ as the protests did.”

The Jerusalem lira is a business for its founders to make money on too. They founded the website in cooperation with Group Market, which specializes in creating peer-to-peer internet platforms and hosts trading communities; similar projects such as Galil Market have followed.

Everybody profits

Bariach and Rosenberg are paid by Group Market to develop the platform and work on it full time, and in addition they earn a few percentage points on every transaction on the site. “I receive a salary from them because this is their flagship project,” says Bariach. “We believe the economic world combines a business idea with a social agenda, and here there is a real economic interest for everyone — us, the residents and the businesses in the community,” adds Rosenberg.

The community managers on Facebook are given an opportunity to earn money as well, though most of them do it for nothing. They approach the managers of the various neighborhood communities on Facebook and offer them use of the Jerusalem lira platform.

“The manager of the community must work as a volunteer, around the clock, in order to manage the community — for the group to be successful you need to make sure the posts are appropriate, to censure racist and chauvinist comments, remove spammers and make sure people don’t try to promote themselves in a manner that bothers the rest of the members of the group. It is work in every way, and these people are busy all the time with the group in order to preserve its level.” Anyone who does not spend enough time on the group will not last, he says. The group managers receives between 1% and 8% of every transaction.

Hundreds of ads for various goods have been put up on the website: The most expensive is a used Peugeot car for 60,000 shekels. There’s also a secondhand MacBook Pro laptop for 7,000 shekels (or 3,500 shekels and 3,500 liras) and a dishwasher for 750 shekels (or 750 liras), all from private individuals. As of May 11, the Jerusalem lira community had 900 members.

“Our goal is to sign up a few hundred Jerusalem businesses and 60,000 to 80,000 users by October,” said Bariach. “It seems it will be very difficult. I would be satisfied with even half of that.”