Local currency

Local currency refers to a currency that is used within a specific locality or community, often as a means to encourage local spending and economic development. These currencies are typically issued by local organizations, businesses, or governments and are intended to be used alongside the national currency.

History

The concept of local currency dates back to the early 20th century. One of the earliest examples is the Wörgl experiment in Austria during the Great Depression. The town of Wörgl issued its own currency to stimulate the local economy, which led to a significant reduction in unemployment and an increase in local economic activity.

Types of Local Currencies

Local currencies can take various forms, including:

• **Complementary currencies**: These are designed to complement the national currency and are often used to promote local economic development. Examples include the Bristol Pound in the United Kingdom and the BerkShares in the United States.
• **Community currencies**: These are used within a specific community to encourage local trade and social cohesion. Examples include the Ithaca Hours in New York and the Totnes Pound in England.
• **Time-based currencies**: These are based on the exchange of time and services rather than money. An example is the Time Dollar system, where participants earn credits for time spent helping others.

Benefits

Local currencies offer several benefits, including:

• **Economic resilience**: By encouraging local spending, local currencies help to keep money circulating within the community, which can make the local economy more resilient to external economic shocks.
• **Support for local businesses**: Local currencies often incentivize consumers to shop at local businesses, which can help to support small enterprises and create jobs.
• **Social cohesion**: The use of local currencies can foster a sense of community and mutual support among residents.

Challenges

Despite their benefits, local currencies also face several challenges:

• **Limited acceptance**: Local currencies are often accepted only by a small number of businesses, which can limit their usefulness.
• **Regulatory issues**: In some cases, local currencies may face legal and regulatory hurdles, particularly if they are seen as competing with the national currency.
• **Sustainability**: Maintaining a local currency system requires ongoing effort and resources, which can be a challenge for small communities.

Examples of Local Currencies

• Bristol Pound (United Kingdom)
• BerkShares (United States)
• Ithaca Hours (United States)
• Totnes Pound (United Kingdom)
• Chiemgauer (Germany)

See Also

• Complementary currency
• Community currency
• Time-based currency
• Economic resilience
• Localism (politics)