Local Currency
Definition and Overview
A local currency is a type of complementary currency that is used within a specific geographical area. It is primarily designed to be spent within a local community at participating businesses and organizations. Unlike national currencies, local currencies are not legal tender and are typically not backed by a national government. Instead, they serve as a complement to national currencies, with the aim of encouraging local spending and supporting locally owned businesses.
Local currencies are often viewed as tools for economic development within communities. They are part of a broader category that includes community currencies and regional currencies, each serving different scales and purposes. A community currency might be used within a particular neighborhood or among a group with a shared interest, while a regional currency might cover a larger geographical area.
Historical Context
Local currencies have been used throughout history, particularly during times of economic crisis or in regions seeking to boost local economic activity. One notable historical example is the Wörgl experiment in Austria during the Great Depression, where a local currency helped to reduce unemployment and stimulate economic activity.
Modern Examples
There are about 300 local currencies documented in the Complementary Currency Resource Center's global database. Some prominent examples include:
- Bristol Pound: Used in Bristol, United Kingdom, this currency was accepted by many local businesses and even supported by the local council for tax payments.
- BerkShares: A local currency in the Berkshire region of Massachusetts, aiming to strengthen the local economy.
- Oakland Grown: In Oakland, California, this initiative encourages spending within the city through a reward points system that functions as a local currency.
Benefits and Challenges
The primary benefit of local currencies is their ability to promote economic resilience by keeping money circulating within a local area. This can lead to more robust local economies, increased employment, and stronger community ties. Additionally, some local currencies are designed to promote environmental sustainability and socially responsible business practices.
However, there are challenges associated with local currencies. Without being legal tender, they rely heavily on the participation and trust of local businesses and consumers. There can also be issues related to scalability and integration with broader economic systems.