Can a city create its own money? And can it do so in a way that ensures everyone is entitled to it, that it works reliably, and that it excludes no one? With the ‘Leu’, the Encointer association and Dezentrum will be putting this question into practice in Zurich from May 2022.
The Leu is a digital local currency designed to function as a communal income: anyone who attends a meeting every ten days and is recognised there by other attendees as a unique individual receives 44 LEU (1 LEU equals 1 CHF). No application, no bank account, no ID. Unused Leu continuously lose value (demurrage), and this loss of value finances the next round of community income. This creates a built-in redistribution mechanism rather than inflation.
From the outset, the project pursued a twofold aim: firstly, to create a genuine, usable local currency for Zurich that strengthens the circular economy and promotes equal opportunities. Secondly, to battle-test the Encointer system under real-world conditions: a currency intended to work worldwide for people without official documents or access to banking must first prove that it can deliver both security and accessibility at the same time.
Zurich was the most challenging and, at the same time, the most obvious test location – right on our doorstep.
Behind this lay an attitude towards money itself. As Malik El Bay put it in an interview with Tsüri.ch: ‘If I work, then I earn money. That’s a fallacy.’ Money is created, not earned. The Leu makes this creation transparent and democratic, and places it in the hands of the community.
Interdisciplinary community work
Dezentrum took overall operational charge of all areas and coordinated an interdisciplinary team, supported by a collaboration with the agency Streuplan, specialists in marketing and communication. The work was carried out along four strands:
Community building At the heart of this were the meetings held every ten days, at which participants recognised each other’s contributions and generated their collective income. Afterwards, people often had lunch together, which strengthened the community spirit. In addition, the LeuTreffs created a social space: places where a payment community became a wider community, with discussions about the currency’s future development.
Acceptance A currency is only worth as much as what you can buy with it. Café Sphères accepted the Leu right from the start, followed in June 2022 by the Berg und Tal market shop. Through systematic field sales and traditional business development (a total of over 500 contacts processed in the sales pipeline), the network grew to 31 formal acceptance points: ranging from restaurants and food shops to yoga studios, hairdressers, florists and copy shops. Circular economy options were highlighted for businesses: paying suppliers in Leu or passing on Leu as a bonus to staff.
Institutionalisation of circular economies The Local Economy Association (LEA) – an association for the circular economy independent of Encointer – was founded and run in collaboration with the largest acceptance points. The LEA buys and sells Leu in order to close local loops and reduce the risk for businesses that accept large amounts of Leu. Several thousand Leu were returned to circulation via LEA buy-backs.
Communication A website, active media relations (including 20 Minuten and Tsüri.ch) and a poster campaign raised the profile of the Leu in the city and encouraged people to engage with the fundamental question: Why do we believe that money can only be created through work?
Leu in figures
Over two years and 119 cycles, Leu has demonstrated that a new form of money can be established. The key figures:
332 people have taken part in at least one cycle and generated Leu
83 per cent of all those who installed the app actually received community income – a remarkably high conversion rate from interest to actual participation
At its peak (18 April 2023), the community comprised 155 ‘Reputables’ – that is, people with recently verified participation; the largest gathering attracted 65 participants (February 2023)
31 formal acceptance points at its peak (end of 2023); following an adjustment to the participation rules in early 2024, the network consolidated to 13 active acceptance points
Leu is thus the first Encointer community to have completed a full life cycle: establishment, growth, peak, and an orderly withdrawal of the professional team, followed by the handover to a small, still-active core group. For Dezentrum, the experiment was concluded in spring 2024 and the focus shifted to the African Encointer communities.
Cycles are the key
Establishing a new currency is possible, but it is a long process. People came along, created money and spent it because others accepted it as payment. Trust in a currency can be built up. However, it requires constant nurturing, visible ways to use it, and time. Years, not months.
The biggest challenge was not creation, but circulation. The transaction data shows this clearly: more places accepting the currency do not automatically mean more turnover, and more turnover does not yet mean closed loops. Popular merchants accumulated Leu faster than they could spend it, and demurrage alone did not motivate them to integrate their supply chains. Planning alone does not solve this problem: planned cycles via suppliers proved difficult to implement. Mechanisms are needed to actively keep money in circulation, and an entity to take responsibility for this task.
The LEA was the initial response to this. Two elements of the Encointer system later emerged from this same learning process: a shared reserve in local currency, the use of which is decided democratically by the community, and the right to exchange local currency for funds from this reserve under defined conditions. In this way, the currency acquires a stable value without the need for a central authority to guarantee it.
Diversity is a prerequisite for its functioning. A community income only supports the most vulnerable if the community is broadly composed. The Leu does not function purely as a provision for those affected by poverty, but as a currency for everyone, whose value arises precisely from the fact that diverse people participate.
The Legacy of the 'Leu'
Leu was the laboratory that paved the way for much more. The protocol, the app and, later, the governance tools were tested and refined under real-world conditions. The lessons learnt about cycles led directly to the Fractional Reserve for Community Currencies. And the experience of building a currency community was incorporated into the collaboration with the Nyota community in Dar es Salaam and the PayNuq community in Zaria, where the system is now growing in entirely different contexts. Zurich has shown that it can be done. Tanzania and Nigeria are demonstrating what it can achieve.
