What Are Local Currencies?
As a personal finance blogger, I follow economics and the ebb-and-flow of the capitalist system here in America, but I often ignore small trends that have global implications simply because they seem crazy on first glance. I’m as guilty as everyone else about missing trends because I think I know better.
Here’s an example: local currency. This sounds like a ridculous thing. You have a small town and within that small town, you have a non-US-dollar currency you can use to buy local goods and services. That’s the kicker: you can’t take that “local currency” to buy things at Wal-Mart.
A great example is BerkShares. BerkShares first appeared in in 2006 in the southern Berkshires region of Massachusetts. Since then, more than 2 million of these paper notes are in circulation. One hundred BerkShares can be purchased for $95 at one of five local banks and exchanged at participating merchants with the same purchasing value as U.S. dollars.
So what’s the point of a BerkShare? The program gives consumers an incentive to keep the notes active and shop and dine locally in the neighborhood businesses that accept them. Consumers get a bargain, and businesses can compete with multi-national corporations thanks to consumers’ preferences to buy local.
The fact is that local economies haven’t embraced the concept… but they should. We may never look at local currency and decide that it’s superior to “local deals.” I think we’ll have to see something far more dreadful happen to our national currency first – and I hope it never does. But movements like this are about transforming the institution of money. Encouraging consumers to focus on local purchases makes them support local economies, at a discount, which is a win-win for consumers and local businesses. Local currencies will become more and more important as time goes on, simply because there’s no way it’s not a winner for the community.