SOPRON, Hungary (Reuters Life!) - Hungary may not adopt the euro in this decade, but people in a town in the west of the country have already begun to ditch the forint currency. Wine-loving locals have launched the Blue Franc instead.
Alternative local currencies have been used around the world for a long time to boost liquidity and trade -- but it is a new phenomenon in Hungary, where, as elsewhere in the eastern half of the European Union, the ultimate measure of economic success has been admission to the euro zone.
The residents of Sopron, a picturesque border town within shouting distance of Austria, have seen and used the euro more often than most Hungarians, and they have welcomed the Blue Franc, too, with open minds - if not always open wallets.
“I’ve seen the notes and I don’t think it’s a foolish idea,” Sopron wine industry worker Geza Czene, 30, said. “Vintners accept it more often than not; they use it amongst each other.”
Vintners, in fact, named the Blue Franc. Napoleon’s troops used francs to buy the local wine, which has been called the Blue Franc since. Now, the name has passed back to the currency.
Its originators have high hopes for it.
“The Blue Franc will not replace the forint completely, but it can account for up to 15-20 percent of local transactions,” said Tamas Perkovacz, a local businessman and president of the nonprofit association that sponsors the currency.
“Because of the recent economic crisis, there is about 4-5 percent less cash in the economy as people save up instead,” he said. “That slows our way back to growth.”
Thus far, the amount of notes in circulation is only worth about $100,000, but Perkovacz, whose family has owned a Sopron restaurant for three generations, says businesses will use about 25 times that amount by the end of this year.
“More than 400 places accept it in Sopron alone, and we have participating businesses from Budapest to Austria,” he said, adding with no small measure of pride: “There are half a dozen places in the euro zone where you can use the Blue Franc.”
The first hurdle the startup currency has to clear is also the most formidable: getting into customers’ hands. Citizens must go to a bank and exchange their forints - one to one - for francs, then go shopping.
To convince would-be buyers that it’s worth the trip, most places offer some discounts for franc holders, typically in the 5-10 percent range. Some offer exceptionally good deals: one hardwood floor maker gives 35 percent off for using the franc.
“It would be a stretch to say a lot of people use it now, but in the weekends, especially, more people bring the franc,” said Edit Fleischhakker, who runs the Domotor Bakery, across from the local theater. “But tourists seem to like it.”
Reporting by Marton Dunai, editing by Paul Casciato