In economics, a local currency is a currency 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. A local currency acts as a complementary currency 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. About 300 complementary currencies, including local currencies, are listed in the Complementary Currency Resource Center worldwide database.

Terminology

Some definitions:

Purpose

Local currencies aim at using money as a tool to achieve social or environmental objectives. According to the New Economics Foundation partner Community Currencies in Action: ... money is simply a social technology and the ways in which it is designed, produced and controlled – far from being neutral or predetermined factors – all influence the effects it has upon society at large. Some of the purposes for community currencies identified by Community Currencies in Action include:

Benefits

The Wörgl experiment illustrates some of the common characteristics and major benefits of local currencies.

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:

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 for server discovery.

List of local currencies

Africa

Asia

Europe

North America

South America

International