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In
economics Economics () is a behavioral science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and interac ...
, a local currency is a
currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...
that can be spent in a particular geographical locality at participating organisations. A regional currency is a form of local currency encompassing a larger geographical area, while a community currency might be local or be used for exchange within an
online community An online community, also called an internet community or web community, is a community whose members engage in computer-mediated communication primarily via the Internet. Members of the community usually share common interests. For many, on ...
. A local currency acts as a
complementary currency A complementary currency is a currency or medium of exchange that is not necessarily a national currency, but that is thought of as supplementing or complementing national currencies. Complementary currencies are usually not legal tender and the ...
to a national currency, rather than replacing it, and aims to encourage spending within a local community, especially with locally owned businesses. Such currencies may not be backed by a national government nor be
legal tender Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment in court for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything ...
. About 300 complementary currencies, including local currencies, are listed in the Complementary Currency Resource Center worldwide database.


Terminology

Some definitions: *
Complementary currency A complementary currency is a currency or medium of exchange that is not necessarily a national currency, but that is thought of as supplementing or complementing national currencies. Complementary currencies are usually not legal tender and the ...
– is used as a complement to a national currency, as a
medium of exchange In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. Most forms of money are categorised as mediums of exchange, i ...
, which is usually not
legal tender Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment in court for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything ...
. *
Community currency A community is a social unit (a group of people) with a shared socially-significant characteristic, such as place, set of norms, culture, religion, values, customs, or identity. Communities may share a sense of place situated in a given g ...
– a complementary currency used by a group with a common bond, such as residents of a locality, association, or members of a business or online community. * Local currency – a complementary currency used in a locality. * Regional currency – a local currency where the locality is a larger region. * Auxiliary currency, microcurrency, Eco-Money – less common synonyms for community or local currency. (see for example Douthwaite & Wagman 1999) * Private currency – a currency issued by an individual, business or non-governmental organization. Complementary currencies are a type of private currency. * Sectoral currency – a complementary currency used within one economic sector, such as education or health care. * Alternative currency – generally, a synonym for complementary currency, referring to a currency designed to work in conjunction with the national currency; less often refers to a type of private currency which attempts to supplant or circumvent the national currency.


Purpose

Local currencies aim at using money as a tool to achieve social or environmental objectives. According to the
New Economics Foundation The New Economics Foundation (NEF) is a Great Britain, British think-tank that promotes "social, economic and environmental justice". NEF was founded in 1986 by the leaders of The Other Economic Summit (TOES) with the aim of working for a "new m ...
partner Community Currencies in Action: Some of the purposes for community currencies identified by Community Currencies in Action include: * Democratizing services and organisations: time credits for volunteering encourage people to actively engage in their community while making services, such as elderly care, more democratic. Zeitvorsoge, Makkie * Supporting small and medium enterprises: Community currencies can serve as a means to promote independent shops over large corporations since they keep on circulating locally. They can also help SMEs support each other financially by lending and receiving credit, goods and services within the currency network. Examples are: Bristol Pound, SoNantes, TradeQoin,
Chiemgauer Chiemgauer is a regional currency started in 2003 in Prien am Chiemsee, Bavaria, Germany. Named after the Chiemgau, a region around the Chiemsee lake, it is intended to increase local employment, supporting local culture, and make the local fo ...
* Countering inequality and
social exclusion Social exclusion or social marginalisation is the social disadvantage and relegation to the fringe of society. It is a term that has been used widely in Europe and was first used in France in the late 20th century. In the EU context, the Euro ...
: Specially designed currencies can address inequality issues by giving everyone the chance to get involved in their community; for instance by rewarding participation in voluntary programs. (Spice Time Credits, Makkie) * Addressing environmental impacts: Community currencies can play a role in better valuation of environmental resources and providing an incentive for more sustainable behavior. For example, the Belgian Portemonnee rewards residents for environmentally positive actions such as composting. Reward currencies can also encourage businesses to adopt more environmentally sound practices. * Maintaining the purchasing power, value preservation. Example: Convertible Minute / Minutes Bank


Benefits

The Wörgl experiment illustrates some of the common characteristics and major benefits of local currencies. # Local currencies with negative interest rates or demurrage currencies tend to circulate much more rapidly than national currencies. The same amount of currency in circulation is employed more times and results in far greater overall economic activity. It produces greater benefit per unit. The higher
velocity of money image:M3 Velocity in the US.png, 300px, Similar chart showing the logged velocity (green) of a broader measure of money M3 that covers M2 plus large institutional deposits. The US no longer publishes official M3 measures, so the chart only runs t ...
is a result of the negative interest rate which encourages people to spend the money more quickly. # Local currencies enable the community to more fully use its existing productive resources, especially unemployed labor, which has a catalytic effect on the rest of the local economy. They are based on the premise that the community is not fully using its productive capacities, because of a lack of local purchasing power. The alternative currency is used to increase demand, resulting in a greater exploitation of productive resources. So long as the local economy is functioning at less than full capacity, the introduction of local currency need not be inflationary, even when it results in a significant increase in total money supply and total economic activity. # Since local currencies are only accepted within the community, their usage encourages the purchase of locally produced and locally-available goods and services. Thus, for any level of economic activity, more of the benefit accrues to the local community and less drains out to other parts of the country or the world. For instance, construction work undertaken with local currencies employs local labor and uses as far as possible local materials. The enhanced local effect becomes an incentive for the local population to accept and use the scrips. # Some forms of complementary currency can promote fuller use of resources over a much wider geographic area and help bridge the barriers imposed by distance. The
Fureai kippu Fureai kippu ( Japanese: ふれあい切符 lit. "caring relationship ticket") is a Japanese sectoral currency created in 1995 by the Sawayaka Welfare Foundation so that people could earn credits helping seniors in their community. The basic u ...
system in Japan issues credits in exchange for assistance to senior citizens. Family members living far from their parents can earn credits by offering assistance to the elderly in their local community. The credits can then be transferred to their parents and redeemed by them for local assistance. Airline frequent flyer miles are a form of complementary currency that promotes customer-loyalty in exchange for free travel. The airlines offer most of the coupons for seats on less heavily sold flights where some seats normally go empty, thus providing a benefit to customers at relatively low cost to the airline. # While most of these currencies are restricted to a small geographic area or a country, through the Internet electronic forms of complementary currency can be used to stimulate transactions on a global basis. In China, Tencent's QQ coins are a virtual form of currency that has gained wide circulation. QQ coins can be bought for Renminbi and used to buy virtual products and services such as ringtones and on-line video game time. They can also be obtained through on-line exchange for goods and services at about twice the Renminbi price, by which additional 'money' is being directly created. Though virtual currencies are not 'local' in the traditional sense, they do cater to the specific needs of a particular community, a virtual community. Once in circulation, they add to the total effective purchasing power of the on-line population as in the case of local currencies. The Chinese government has begun to tax the coins as they are exchanged from virtual currency to actual hard currency.


Difficulties and criticisms

Local currencies and the Transition Towns movement in the UK have been criticized for failing to address the needs of the wider population, especially lower socio-economic groups. Such local currency initiatives have been more widely criticized as having limited success in stimulating spending in local economies, and as an unrealistic strategy to reduce carbon emissions.


Modern local currencies

Modern local currencies can be classified into the following distinct types: # Transition currency based on the local currencies used by the Transition Towns movement in the UK. They include Brixton Pound and Bristol Pound in the UK, BerkShares in the USA, and Salt Spring Dollars in Canada.
Transition currencies are payment voucher-based systems that are exchangeable with the national currency. Between 2002-2014 many experiments in local currency took this form. Such currencies aim to raise the resilience of local economies by encouraging re-localisation of buying and food production. The drive for this change has arisen from a range of community-based initiatives and social movements. The Transition Towns movement originating in the UK has used local currencies for re-localisation in the face of energy descent from
peak oil Peak oil is the point when global oil production reaches its maximum rate, after which it will begin to decline irreversibly. The main concern is that global transportation relies heavily on gasoline and diesel. Adoption of electric vehicles ...
and
climate change Present-day climate change includes both global warming—the ongoing increase in Global surface temperature, global average temperature—and its wider effects on Earth's climate system. Climate variability and change, Climate change in ...
. Other drives include movements against
clone town Clone town is a term for a town where the High Street or other major shopping areas are significantly dominated by chain stores, thus making that town indistinct from other town centres. The term was coined by the New Economics Foundation (NEF ...
and big-box trends. # Rewards currency based on the frequent flyer model. Consumer spends cash with participating businesses who issue rewards points in a local currency. These rewards points can be used to offset cash prices in future purchases. An example is Oakland Grown in Oakland, CA. # Mutual Credit currency based on the mutual credit system. This can be further sub-divided into two: ##
Time-based currency In economics, a time-based currency is an alternative currency or exchange system where the unit of account is the person-hour or some other time unit. Some time-based currencies value everyone's contributions equally: one hour equals one service ...
also known as Time Banks that use time as a measure of value. An example is Dane County Time Bank. ## Trade exchanges and LETS (
local exchange trading system A local exchange trading system (also local employment and trading system or local energy transfer system; abbreviated LETS) is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community infor ...
) that use price as a measure of value. An example of local currency implemented as a trade exchange is Bay Bucks in the Bay Area of California, USA. LETS were originally started in Vancouver, Canada, there are presently more than 30 LETS systems operating in Canada and over 400 in the United Kingdom. Australia, France, New Zealand, and Switzerland have similar systems.


Software

Several software packages have been written supporting the management of community currencies. In 1998, Richard Kay, a senior lecturer at Birmingham City University, wrote a "Multi-registry System" specification for routing and processing community currency transactions using an approach designed to be decentralized, with no single point of control or failure, using the
Domain Name System The Domain Name System (DNS) is a hierarchical and distributed name service that provides a naming system for computers, services, and other resources on the Internet or other Internet Protocol (IP) networks. It associates various information ...
for server discovery.


List of local currencies


Africa

;Kenya: *Bangla-Pesa ;South Africa: *
Community Exchange System The Community Exchange System (CES) is an internet-based global trading network which allows participants to buy and sell goods and services without using a Fiat money, national currency. It may be described as a type of local exchange trading s ...
(CES) * Ora


Asia

;Japan: *
Fureai kippu Fureai kippu ( Japanese: ふれあい切符 lit. "caring relationship ticket") is a Japanese sectoral currency created in 1995 by the Sawayaka Welfare Foundation so that people could earn credits helping seniors in their community. The basic u ...
;Korea: *
Gyeonggi Province Gyeonggi Province (, ) is the most populous province in South Korea. Seoul, the nation's largest city and capital, is in the heart of the area but has been separately administered as a provincial-level ''special city'' since 1946. Incheon, ...
* Si-ru - Kyunggi-do Sheung city * Bucheon Pay - Kyunggido Bucheon City * Daeon - Kyunggido Ansan city * Seoul Love Gift Token - Seoul city * NO WON - Seoul city No won gu * Kangdong Bilsalmoney - Seoul city Kang dong gu * Incheon Euem Card - Incheon Metropolitan City * Ontong Daejeon - Daejeon Metropolitan City * Dong baek jeon - Busan Metropolitan City * E Bargu pay - Busan Metropolitan City Donggu * ohrukdo pay - Busan Metropolitan City Namgu * Daegu Hangbok Pay - Daegu Metropolitan City * Tamnanen Jeon - Jeju ;Malaysia: * Kelantanese dinar


Europe

;Austria: *TriestingTaler ;Belgium: *Zinne ;France: * Abeille *
Eusko The eusko is a local currency released by the non-profit organization "Eusko Moneta erakundea", and is one of a number of currencies that are active in the Basque Country. It is mainly used in the Northern Basque Country, France, with plans t ...
*Krôkô *
Occitan Occitan may refer to: * Something of, from, or related to the Occitania territory in parts of France, Italy, Monaco and Spain. * Something of, from, or related to the Occitania administrative region of France. * Occitan language, spoken in parts o ...
;Germany: *Approximately 300 ''Tauschringe'' (comparable to
LETS A local exchange trading system (also local employment and trading system or local energy transfer system; abbreviated LETS) is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community infor ...
) *Berliner Regional *
Chiemgauer Chiemgauer is a regional currency started in 2003 in Prien am Chiemsee, Bavaria, Germany. Named after the Chiemgau, a region around the Chiemsee lake, it is intended to increase local employment, supporting local culture, and make the local fo ...
* Urstromtaler ;Greece: *Ilios ;Italy: *
Simec SIMEC Group Ltd is a British international energy and natural resources business focused on resources, sustainable power, infrastructure, and commodities trading. It is part of the GFG Alliance, which is owned by members of the Gupta family. His ...
;Russia: * Kolion ;Slovakia: *Zvolenský živec ;Spain: * Recurs Econòmic Ciutadà (
Barcelona Barcelona ( ; ; ) is a city on the northeastern coast of Spain. It is the capital and largest city of the autonomous community of Catalonia, as well as the second-most populous municipality of Spain. With a population of 1.6 million within c ...
) * Boniato * Costavales * Eco * Ecoseny * Ecosol * Edenred * Ekhi * EuroDelta * Expronceda * Illa * Irati * Mola * Ogerleko * Osel * Ossetana * Pancha * Puma * Turuta * Txanpon * Txantxi * Varamedí ;Switzerland: * WIR franc (since 1934)Lila Erard
"Le Farinet, monnaie locale 100% valaisanne, verra le jour début 2017"
''
Le temps ' (, ) is a Swiss French-language daily newspaper published in Berliner format in Geneva by Le Temps SA. The paper was launched in 1998, formed out of the merger of two other newspapers, and (the former being a merger of two other papers), ...
'', 18 November 2016 (page visited on 18 November 2016).
* Reka-Check (since 1940) * Léman * Farinet (since 2017) ;United Kingdom:''See here: List of community currencies in the United Kingdom''


North America

;Canada: ''See here: List of community currencies in Canada'' ;Mexico: *AmanatliConoce las monedas alternativas que circulan en México
Retrieved on 2019-12-21.
*Caribe *Fausto *Itacate *Kuni *Túmin
Retrieved on 2019-12-21.
;United States: ''See here: List of community currencies in the United States''


South America

;Argentina: * Crédito


International

*
Community Exchange System The Community Exchange System (CES) is an internet-based global trading network which allows participants to buy and sell goods and services without using a Fiat money, national currency. It may be described as a type of local exchange trading s ...
(CES) *
Ven Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in the Caribbean Sea. It comprises an area of , and its popul ...
by Hub Culture * Convertible Minute (currency) by Minutes Bank


See also

*
Barter In trade, barter (derived from ''bareter'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods ...
*
Buy local Buy may refer to a trade, i.e., an exchange of goods and services via bartering or a monetary purchase. The term may also refer to: Places * Buy (inhabited locality), any of several inhabited localities in Russia * Burlington-Alamance Regional A ...
*
Collaborative finance Collaborative finance is a category of financial transaction that occurs directly between individuals without the intermediation of a traditional financial institution. This new way to manage informal financial transactions has been enabled by advan ...
* Conder token * Emissions Reduction Currency System for community based initiatives aimed at emission reduction *
Fiscal localism Fiscal localism comprises institutions of localized monetary exchange. Sometimes considered a backlash against global capitalism or economic globalization, fiscal localism affords voluntary, market structures that help communities trade more effic ...
*
Informal sector An informal economy (informal sector or grey economy) is the part of any economy that is neither taxed nor monitored by any form of government. Although the informal sector makes up a significant portion of the economies in developing countri ...
(aka informal economy) *
Local exchange trading system A local exchange trading system (also local employment and trading system or local energy transfer system; abbreviated LETS) is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community infor ...
*
Local multiplier effect The local multiplier effect (sometimes called the local premium) is the additional economic benefit accrued to an area from money being spent in the local economy. The concept has been taken up by advocates for "spend local" campaigns in addition to ...
* Paul Glover (activist) * Schumacher Center for New Economics *
Scrip A scrip (or ''wikt:chit#Etymology 3, chit'' in India) is any substitute for legal tender. It is often a form of credit (finance), credit. Scrips have been created and used for a variety of reasons, including exploitative payment of employees un ...
*
Sharing economy The sharing economy is a socio-economic system whereby consumers share in the creation, production, distribution, trade and consumption of goods, and services. These systems take a variety of forms, often leveraging information technology and the ...
*
Time-based currency In economics, a time-based currency is an alternative currency or exchange system where the unit of account is the person-hour or some other time unit. Some time-based currencies value everyone's contributions equally: one hour equals one service ...


References


Further reading

* ''People Powered Money: designing, developing and delivering community currencies'' (2015) Community Currencies in Action (https://neweconomics.org/uploads/files/0dba46d13aa81f0fe3_zhm62ipns.pdf PDF]) * ''An overview of parallel, local and community currency systems'' by DeMeulenaere, S (1998) Complementary Currency Resource Centre * ''An economic analysis of contemporary local currencies in the United States'' by Krohn, G and Snyder, A (2008) International Journal of Community Currency Research, Vol. 12, pages 53–68 {{DEFAULTSORT:Local Currency Local currencies, Freiwirtschaft Localism (politics) Monetary reform Community building