The picture-postcard town of Lewes in East Sussex is best known for its annual bonfire celebrations. But in early September it shot to national attention for another reason - launching its own currency in the hope of boosting local businesses and beating the credit crunch.

As the town prepares for its feisty November 5 commemoration of the Guy Fawkes gunpowder plot and of 17 Protestant martyrs burned there by Mary Tudor in the 16th century, this year sparks have also been flying... about the Lewes Pounds. Eager children were buying their post-school snacks with the smart green notes, decorated with 18th-century radical thinker and resident Thomas Paine on one side and Lewes castle on the other; townsfolk were walking to the shops to buy with it and the community in general enjoyed a powerful boost to its civic pride.

And then they ran out. Just three days in, the inital 10,000 Lewes Pounds had been bought with only a portion making their way into the economy. Many residents bought them as souvenirs, while some fell into the hands of collectors or were sold on eBay for £35 a piece.

Undaunted, the Lewes Pound Group issued further currency on October 4th. Oliver Dudock van Heel, a member of the group, is coy about how much. 'If you put a figure on it, people assume scarcity,' he says. 'I can say that there are now over 25,000 Lewes Pounds in circulation and more in stock.'

Although cutting CO2 emissions and depriving the chain stores of some of the town's cash are on the Pound's manifesto, van Heel stresses that its initial purpose was simply to encourage people to spend locally and to increase a sense of pride in the community. 'All we wanted to achieve in the first year was raised awareness of local shopping and we have already done that in the first two months. People really get the idea.' But is it only Lewes' middle-class, left-leaning, eco-aware residents who have embraced the concept? 'No,' he says. 'There has been a lot of interest across the town, a complete spectrum of individuals.'

Seventy traders were signed up to the scheme at launch, but this has now blossomed to 125. Amongst them are Lewes big guns Bill's Produce Store (recently bought out by Richard Caring, owner of London's celebrity haunts The Ivy and Le Caprice) and the Harveys brewery, which now also gives 10% of all its charitable donations in the LP, and has launched a beer, the Quidsin, in honour of the scheme.

The Pound is scheduled to circulate until the 30th August 2009, but the Lewes Pound Group, working with the New Economics Foundation, is already considering how to take it forward after that. 'All we need is enthusiasm from traders and the people of the town,' says van Heel. 'If in six months time it is being traded and people want to keep it, then it will continue.'

Introducing higher denominations is a priority for a second phase of the currency, with many of the more exclusive shops and boutiques at the top of the High Street reporting scant or no sales in Lewes Pounds. 'I am absolutely in favour of it, but I have never been offered it,' says Daphne Culligan, of clothes shop Renwick Clarke. 'Apart from £10 T-shirts, the clothes here are too expensive for someone to pay for them in single pounds.'

Higher denominations demand a substantial increase in security, though, and consequently cost more to produce, while the modest £1 note has proved super secure. A cheaper option is a card based system, like the WIR used by 16% of Swiss businesses.

While higher-end shops may have to wait for bigger notes or a payment card before the currency makes much difference to them, traders like Sue May of Mays General Store are already feeling the benefit. 'People use it now without commenting on it - it's become normal,' she says. Between 15% and 30% of her sales are now in the Lewes Pound and the shop is busier than ever. 'There's real interest in the scheme and also a loyalty factor - people try to shop locally.'

Sue is also one of three issuing points for the currency in the town, and finds people typically exchange £40 or £50 sterling for the local notes at a time. Last week she issued around 900, 'and to a real mix of people.' Andi Mindel is one. A single mother, who volunteers at Friends of the Earth in London part time, Andi changes around £120 into Lewes Pounds each fortnight. 'It makes me feel deeply rooted here,' she says. It has largely replaced sterling for her and her eight-year-old son Daniel, who gets five as pocket money every fortnight. 'I go to Waitrose for the things I can't buy locally, otherwise I buy everything with it. It can be a bit more expensive, but it evens out through the acts of kindness the shop owners have shown me. I now have a relationship with people that wasn't there before. It's brought the community together and provoked discussion. Plus, there's just a certain pleasure in counting out 20 one pound notes to buy your food.'

Trading on the novelty value
Stephen Catlin has lived in Lewes for 10 years, 'but known it for 40' and runs a tobacco and confectionary shop on the High Street. He was one of the original 70 traders to sign up to the scheme, but is now sceptical. 'It gave a buzz, it was something new, but since the Pounds ran out and were reissued there has been scant interest,' he says. 'I only ocassionally get offered them. I had 15 amassed in the till, but no one wants them in change, so I shall have to take them back to the Town Hall and change them.' He feels the USP of the Pound - its ability to keep local money within the local economy - is a nonsense. '£9.75 of every £10 I make goes out of Lewes because I can't acquire what I need to sell locally. There isn't a Lindt chocolate maker in the town, or a cigar manufacturer. I suppose the 4p I make on a packet of cigs stays in Lewes,' he shrugs, 'but I don't believe that will make much difference.' Catlin remembers a time just 40 years ago when the town was sustained by two breweries, a foundary, a quarry and a printworks and the High Street was busy with shoppers at lunch time. 'Now, just look at it,' he says. 'People don't go out each day to shop. What this town needs is work. The Lewes Pound, while it provided real local interest, is not the long term answer to the town's commercial success. It's simply a novelty.'