Business & Economy Czech Republic News

Czech “local currency” highlights hopes of speedy post-Covid recovery

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Prague, Czech Republic – The Czech town of Kyjov has launched a pilot project promoting the use of a “local currency” to boost the post-Covid economic recovery, Reuters reported earlier this week.

Under the unconventional monetary scheme, up to 2,000 residents of the Czech town of Kyjov, south Moravia, are entitled to receive 400 Kc worth of “corrents”, a “local currency” in the form of digital vouchers that they can spend in a selected number of local businesses, shops and restaurants.

Only residents of Kyjov, which has a population of approximately 11,000, can participate and benefit from this “smart discount”. At the time of writing, over 1,100 people had taken part in the program, set to run until May 25 before evaluation.

After registering online to open a digital corrents account, customers can visit the 38 stores part of the scheme and pay half of their purchase with “corrents” and the other half with their own money. To validate the purchase, they need to show a code received by text message or their ID.

Once the transaction has been confirmed, businesses only have to wait a day or so to receive the amount spent in corrents converted into Czech crowns.

Initially meant to be launched in January but postponed to wait for the relaxation of restrictions, the scheme is meant to boost the town’s economic recovery after long months of lockdown that have seen most non-essential shops and services closed. The plan has been likened to the “helicopter money” strategy, an unconventional monetary policy whereby a country’s central bank prints large sums of money distributed directly to the population to boost household spending.

According to Reuters, the scheme is administered by local entrepreneur Pepe Rafaj, who came up with the idea following a hackathon organised last year by CzechInvest and the Ministry of Industry and Trade, and is funded to the tune of 800,000 Kc by an unknown individual wishing to remain anonymous.

“At this time, for such an extraordinary purpose, it can be a suitable instrument,” said Jiri Rusnok, a former Prime Minister and current governor of the Czech National Bank.

Kyjov mayor Frantisek Lukl expressed hopes that part of the EU’s post-pandemic economic recovery package could be “redistributed through corrents” in other parts of the Czech Republic in order to support local businesses badly hit by the pandemic and its economic fallout.

A number of products such as betting tickets, cigarettes and alcohol (apart from local winemakers) will be excluded from the scheme and won’t be purchasable with “corrents”, according to Czech Crunch.

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