Local Currency: Redesigning the Economy for Sustainable Growth

Local currency is a game-changer for local economies. By keeping money within the community, local currency can stimulate local spending and create a more self-sufficient economy.

The Brixton Pound, a local currency in London, has been in circulation since 2009. It's accepted by over 1,000 local businesses, which is a significant portion of the area's economy.

Using local currency can also help reduce carbon emissions by reducing the need for long-distance transactions. For example, the Bristol Pound has been linked to a reduction in carbon emissions by 15.6 tons per year.

By redesigning the economy with local currency, communities can take control of their own economic development and create a more resilient local economy.

Related reading: Bristol Pound

The Wörgl experiment in Austria during the Great Depression is a great example of the potential efficacy of local currencies. In 1932, the town's mayor, Michael Unterguggenberger, introduced a local script that carried a negative 1% monthly interest rate and could be converted into schillings at 98% of face value.

This script was readily accepted by local merchants and the population, and it was used to carry out 100,000 AS in public works projects. The script circulated 13 times faster than the official shilling and served as a catalyst to the local economy.

The Wörgl experiment was successful in eliminating unemployment and increasing local government revenue, but it was eventually suspended due to opposition from the regional socialist party and the Austrian central bank.

Findhorn's (Scotland) Eko was created by members of the Findhorn Ecovillage in 2002 as a local currency. All community members and businesses within the eco-village, plus 2 pubs and a café in the neighboring village, accept the local currency Eko.

The local currency Eko stays within the local economy, providing a purchasing power that benefits the community. This is because Eko is only accepted within the Findhorn community.

In the first year of the system, Ekos generated a turnover of business of approximately £150,000. This was achieved through an average of ten full spending cycles for each note.

Eko was used to provide low-interest loans for community businesses, such as renewable energy investments or affordable housing, using "fiat" money.

The Swiss WIR is a complementary currency that was founded in the 1930s due to currency shortages and global financial instability.

It's amazing to think that this currency has been serving a vital role in Switzerland's economy for nearly a century. The WIR currency has an annual turnover of 1.2 billion Swiss Francs.

This is no small feat, especially considering it's used by around twenty percent of Switzerland's small and medium-sized enterprises. The WIR is serving 62,000 SMEs around the country.

In the midst of the Great Depression, a small town in Austria called Wörgl introduced a local script that showed remarkable efficacy. The script was designed to stimulate local economic activity and was accepted by merchants and the population alike.

The Wörgl experiment, as it came to be known, was initiated by the town's mayor, Michael Unterguggenberger, and involved the creation of 32,000 labor certificates that carried a negative 1% monthly interest rate. These certificates were used to finance public works projects, including construction and repair of roads, bridges, and buildings.

Between 1931 and 1932, local government revenue increased from 2,400 to 20,400 Austrian Shillings, while unemployment was eliminated in Wörgl. In contrast, the rest of the country struggled with high unemployment rates.

Other communities also experimented with local currencies, including Emperor Norton's own currency and the Prosperity Certificate. However, these initiatives faced opposition from regional authorities and were eventually shut down.

Here are some notable examples of historical local currencies:

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Local currencies offer several economic benefits, such as increased local spending and investment. This can lead to a more vibrant and diverse local economy.

One of the key benefits of local currencies is that they can stimulate local economic growth by keeping money within the community. This reduces the amount of money that leaves the local area and is spent elsewhere.

In theory, local currencies offer several economic benefits, such as increased economic activity and job creation.

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Local currencies work by being issued by a local community or organization, not by a central bank. They're designed to be used within a specific geographic area, like a town or city.

The Bank of England explains it in a simple way, showing how local currencies work through a brief video. The video is a great resource for understanding the concept.

Local currencies are often backed by a commodity or service, providing a tangible value to the currency. This can be anything from a basket of goods to a specific service offered by the community.

The value of a local currency is determined by the community that uses it, making it a more community-driven approach to money.

Take a look at this: History of Central Bank Digital Currencies by Country

Local currencies are being used in various modern applications to promote community development and local economic growth. The Bristol Pound, for example, is a local currency that is accepted by over 700 businesses in the city.

In the UK, the Totnes Pound is another example of a local currency that is helping to boost the local economy. It's accepted by over 200 local businesses and has been in circulation since 2007. The Totnes Pound has helped to keep money within the local community, supporting local businesses and reducing the reliance on national currency.

The use of local currencies can also be seen in the United States, where cities like Ithaca and Binghamton have their own local currencies. These currencies are designed to promote local economic growth and community development, and are often used in conjunction with national currency.

BerkShares have been circulating in the local economy for 15 years, stimulating it to the tune of $10 million.

The Schumacher Center for a New Economics created and runs BerkShares, with a goal to keep the money circulating among local merchants.

It's free to send and receive digital BerkShares, and they can be exchanged at a 1:1 rate with USD.

Converting BerkShares back to USD comes with a 1.5% fee, making it beneficial to keep them in circulation.

Regional currency is not new, as local currencies were widely used throughout the early 1900s to promote community economic empowerment and development.

Trading in BerkShares distinguishes local businesses that accept the currency from those that do not, fostering relationships between business owners and residents.

BerkShares aims to pilot programs that other areas can replicate in their own communities, making it a model for regional economic development.

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Modern local currencies have experienced a significant surge in popularity over the past two decades, with over 2500 different systems operating worldwide.

There are many successful systems, including LETS, which is a trading network supported by its own internal currency. LETS originated in Vancouver, Canada and has since expanded to over 30 systems in Canada and over 400 in the UK.

Worth a look: Does Canada Have Its Own Currency

The popularity of local currencies can be seen in various regions, including Australia, France, New Zealand, and Switzerland, which all have similar systems.

Here are some notable local currency systems:

These systems are not legal tender, but they have been successful in facilitating local trade and community engagement.

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Local currencies can help strengthen and decarbonize a community's local economy.

They give local residents an incentive to shop locally, which can build community spirit and reduce people's carbon footprint.

Local currencies are usually accepted by local traders of all kinds, but they're not legal tender, so traders don't have to accept them.

This means local currencies can't be used for national or international trade, but they can promote local trade and strengthen the local economy.

By using local currencies, communities can reduce their dependence on decisions made elsewhere and gain greater control over their financial resources.

Trading with local currencies can be a game-changer for your community. Local currencies are currencies that circulate mostly locally and at a community level, working as a complement to the official currency.

They're usually accepted by local traders of all kinds, and they give local residents an incentive to shop locally. This helps build community spirit and reduces people's carbon footprint.

Local currencies aim to operate alongside the official currency of a place, but they're not legal tender, so no one has to accept them if they haven't agreed to be part of the currency's trader network.

The growth of local currencies is largely driven by the need to protect and nurture local economies, which is becoming increasingly important due to the instability in the international monetary system.

Financial crises are becoming more frequent, and this instability is prompting communities to explore alternative ways to manage their finances.

Growing recognition of the importance of local economies is also a key factor in the rise of local currencies.

By giving local people and local economies greater control over their financial resources, local currencies can reduce dependence on decisions made elsewhere that may not consider local social cultures and bioregional resources.

This movement is idealistic in some regions, but it has shown promise in areas with strong local industries.