Bristol launches its own pound

Is it the green one with the fox and the bike, or the pink one with the tiger in a hoodie painting graffiti on a wall? "It's like being on holiday abroad," says Lee Peacock from his Cupteabar drinks stall as he flicks through a wodge of Bristol's unfamiliar new banknotes, trying to work out which one he needs to hand back as change for my iced tea.

The West Country city launched its own local currency to great fanfare yesterday with the Lord Mayor handing over a crisp £B1 note in symbolic exchange for a round loaf of granary bread made by local baker Joe Wheatcroft, who said he would put his first piece of Bristolian cash towards buying a dairy cow.

Inspired by similar schemes in Totnes, Lewes, Stroud and Brixton, the organisers of the quirky not-for-profit project hope the notes – designed by local artists and coming in denominations of £B1, £B5, £B10 and £B20 – will encourage residents to buy locally produced goods from independent retailers that accept them rather than from chains and megastores. With a steady queue of residents lining up to swap their pounds sterling for quids Brizzle – with an exchange rate of 1:1 – the early signs are good.

The level of interest is far more than just local, too. TV crews from as far afield as Russia, China, Ukraine, Belize and Singapore were keenly questioning the organisers, and other towns across the UK are watching with interest to see if local currencies could be the answer to their own high-street woes.

Lynn Andres, from Guy Fawkes Hair & Beauty, was bullish that the Bristol Pound is not a gimmick and will bring new custom to her premises, saying the old city needed to fight back after a mall heavily populated with chain stores opened recently.

"It's hit trade," she says. "What we want is to get more people shopping here in the independent shops because we've got a lot to offer."

Around 300 independent businesses have signed up so far, but the organisers hope that more than 1,000 will soon be involved.

The limits are obvious when i is left disappointed after trying to buy a scrumptious-looking pastry from the PieMinister stall and finding that it doesn't accept the new currency. Still, there's more luck at the Royce Rolls Café – though as there are no coins and no Bristol Pence the change is given in conventional coppers and silvers.

One of the most attractive features of the currency for small shopkeepers and stall holders is that customers can pay for goods by text message – allowing independent retailers to accept non-cash payments without having to go to the expense and trouble of setting up a credit card machine. It might seem that spending money simply by showing a membership card to the seller and texting the cost of the item, the name of the shop and a personal pin code to the Bristol Credit Union, which is overseeing the system, would leave you vulnerable to criminals. But James Berry, the co-operative's chief executive, points out that the typical choice of items is unlikely to persuade Britain's aspiring fraudsters to move into the city.

"It's hard to imagine that someone who got hold of both your card and your phone would then think, 'I'm going to go and buy some local independent goods'," he says. Ciaran Mundy, a director of the Bristol Pound, assured i that six months of research had gone into foiling wannabe counterfeiters.

Bearing in mind that the council is offering to pay workers in Bristol Pounds, it's just as well. People pushing wheelbarrows of the new notes around in a latter-day Gloucestershire version of Weimar Germany, with its hyperinflation, is not what the local economy needs.