An independent clinical opportunity is available with the Schumacher Center for a New Economics.
BerkShares, Inc. was founded in 2006 to issue a local currency in the Southern Berkshire region of Massachusetts. The paper currency is beautifully designed and printed on paper from Crane, Inc., which for years made the paper for US dollars. The design honors cultural heroes of the region, including the Mohican indigenous nation, W. E. B. Du Bois, who was born in the Berkshires and authored of The Souls of Black Folk, Robyn Van En, who started the country’s first Community Supported Agriculture farm in the Berkshires, Herman Melville, who wrote Moby Dick from his Berkshire home, and Norman Rockwell, champion of small town America.
The currency is exchanged for federal dollars at nine branches of three local banks. Since their issuance, over ten million BerkShares have been distributed via these banks to be spent at over 400 registered businesses. About 140,000 BerkShares are in circulation at any one time.
The Schumacher Center for a New Economics, founded in 1980, has provided research and development assistance to BerkShares, Inc. as the currency has progressed. Named after Fritz Schumacher, the author of Small Is Beautiful: Economics as if People Mattered, the Schumacher Center is known for championing local economies that are community-controlled.
The three internships are described below. Interns will report to both Fennie Wang and Susan Witt, the co-founder of BerkShares, Inc. and the executive director of the Schumacher Center. The internships will involve cutting-edge legal research into digital payments, evolving stablecoin laws, and related topics.
- Community Banking Compliance Internship
This intern will be tasked with researching and working with community banks to develop an understanding of the regulatory relationship between the local currency and the community banking system in the Berkshires. The intern will explore the following:
- BerkShares’ goal is to maintain community banks’ participation while going digital. How can a digital local currency make administration easier for the banks while bringing them new business? Could digital BerkShares serve as an electronic banking platform for these banks to offer innovative new digital banking services?
- First, on the backend, we need secure software that makes it easy for banks to reconcile digital deposits/issuance and redemption/digital cash-outs. This feeds into the master accounting/balance sheet for BerkShares.
- Second, how can we design the system such that digital BerkShares streamline “Know Your Customer (KYC)/Anti Money Laundering” compliance costs, making them cost-effective for the banks (as BerkShares Inc. also has potential liability as the legal manager of BerkShares)?
- Examples of cross-functional business opportunities. Consumers or merchants who open the BerkShares app must complete some basic KYC. Bank A can sign a KYC credential to the user’s BerkShares wallet. In this way, the user can easily open a personal or business bank account with Community Bank A, as it has already done KYC. The customer may now use her bank account to fund purchases of BerkShares and to also deposit redemptions. The bank can easily offer small business loans or other loans through the same app. Hopefully in the future those loans can be in BerkShares and may enable movement towards a WIR model.
- A user research study with the banks would be helpful in understanding their current processes, including KYC/AML and reconciliation, along with their plans to reach new customers or more deeply engage customers through digital banking services. This will equip the design of the BerkShares app to solve actual user pain points.
- Scaling Local Currency Internship
This intern will be tasked with the research and development of a proposal for a robust legal structure for scaling BerkShares digitally. The intern will explore the following:
- In order to implement good product rollout of the previously-described initiative and ensure user uptake/scale, we must determine how to augment BerkShares Inc. so it becomes legally robust enough to service BerkShares as the organization scales, and to handle initiatives like issuing municipal bonds or dealing with tax receipts.
- The legal structure for BerkShares may be outsourced to a third-party special purpose state trust charter, which can be a non-profit designed to house the regulatory compliance and technology infrastructure to issue or “white label” many community currencies.
- Stablecoins today use state trust charters as the legal issuer. The trust has compliance (KYC/AML, servicing and accounting for issuance and redemption), security (operational, IT systems), risk management (prudential reserves management) and other operational obligations to ensure that community currencies like BerkShares are well-protected for consumer and merchant use. For example, the U.S. Treasury has administered guidance that mirrors that of the EU, requiring the right of 1:1 redemption of stablecoins to their issuers (which BerkShares is already doing) and that underlying reserves be prudently managed and held at regulated US institutions (which they already are) in high quality assets (though this need not all be cash — perhaps there are somewhat higher-yielding but still high quality longer-term savings instruments that these banks offer).
- Existing models for white label trusts that issue stablecoins for clients (e.g. Paxos Trust, which issues the Paxos Dollar, and Paxos Gold stablecoins, which serve as the regulatory white label for other stablecoins like Binance Dollar).
- Universal Basic Income Research Internship
This intern will be tasked with researching the issue of community currencies as a vehicle for achieving Universal Basic Income and the potential for funding such an initiative through impact bonds. The intern will explore the following:
- There is currently a lot of discussion around UBI and guaranteed income programs, for example, through the Mayors for A Guaranteed Income initiative, which has received another $15 million donation from Jack Dorsey. Why have UBI programs not issued funding in the form of community currencies so that the money stays in underserved communities, creating a multiplier effect in local economies? This would be a way to leverage the impact of the same donation dollar – to benefit both low-income people and small businesses in those communities.
- Could we use an impact investment model to more sustainably fund UBI programs (as community currencies) rather than rely purely on donations (as tax increases may be unlikely or unpopular)?
- The Trust would be useful in this context, as it could issue impact bonds which would fund the reserves against which the community currencies are issued and distributed as a form of cash assistance.
- Foundations, humanitarian organizations, impact investors, corporations and banks pledge assets to the Trust and receive a small return earned through interest on reserves. In downside scenarios (e.g. greater redemptions than anticipated at any given time) in which impact bonds cannot be rolled at time of maturity, the principal can convert into a tax-deductible donation with debt extinguished.
- The greater velocity of money or multiplier effect associated with community currencies is crucial to the economic model of these impact bonds. The higher the velocity of money means the lower the redemption to cash, which means the reserves can stay invested longer, thereby generating a sufficient return to cover the Trust’s costs and pay a small coupon to the impact investors.
Results and recommendations from all three research projects are to be presented to the Schumacher Center for New Economics at the end of the semester.
Qualified candidates must have:
- Excellent writing and presentation skills;
- Excellent organizational skills;
- Familiarity with public relations and a high comfort level with interviews and public speaking;
- Ability to self-motivate and work independently;
- A passion for local economies and local currencies;
Housing in a 4-bedroom shared home near the Schumacher Center’s office and library is available. This internship will be overseen by Fennie Wang and Susan Witt. Hours per week and accommodation for remote work and/or on-site work in the Berkshires can be arranged.
If interested, please send a resume, a cover letter, a 1-2 page writing sample, and an unofficial academic transcript to: email@example.com with “BerkShares internship” in the subject line by Tuesday January 19, 2021.
Schumacher Center for a New Economics
140 Jug End Road, Great Barrington, MA 01230
If selected for an internship, students must submit an independent clinical application https://hls.harvard.edu/dept/clinical/pre-approved-placements/ . Prof. Desan will serve as the faculty sponsor. Questions may be directed to Liz Solar, Director of Externships, firstname.lastname@example.org