Circulating currencies
Community currenciesIn economics, a local currency, in its common usage, is a currency not backed by a national government (and not necessarily legal tender), and intended to trade only in a small area. These currencies are also referred to as community currency, and are a form of alternative currency or complementary currency. They encompass a wide range of forms, both physically and financially, and often are associated with a particular economic discourse.
A few such currencies, however, developed into monetary systems in their own right. The idea of using free banking to produce an alternative, community-level currency dates back at least as far as the German Credit Unions in the 1800s. The oldest local currencies known to be in continuous use are the WIR in Switzerland, and the Labor Banks in Japan.
Advocates of local currency, such as Jane Jacobs, argue that this enables an economically cool, yet depressed region to pull itself up by giving the people living there a medium of exchange that they can use to exchange services and locally-produced goods. In a broader sense, this is the original purpose of all money. Local currencies also tend to operate in relatively small geographic regions and encourage recycling and reducing the amount of carbon emissions from the transportation and manufacture of goods. As a result, they are part of the economic strategy of many green and sustainable-living groups such as the Green Party of England and Wales.
