You know about the Dollar and the Euro. You may even know about the Peso, the Yuan, and the Pound but you have probably never heard of the Bay Bucks or Ithaca Hours. These two strange sounding names are examples of the local currencies that some communities are printing in order to revitalize their local economies.
Most local currencies are based on service. Just like traditional dollars, you can earn local currency by performing a service or selling goods in your local community. By setting up a type of bartering system, a local currency serves as a type of trade barrier. This not only allows for compensation to those who may have otherwise not had a traditional job, it also keeps more local economic activity in the community since the currency is worthless outside of the local area. Still don’t understand? Here are a few of the local currencies in circulation right now.
Life Dollars  is a local currency based in the Seattle, Washington area. The exchange rate is based on the local hourly living wage making one Life Dollar worth between $10 and $12. This currency is almost completely exchanged in digital format to prevent fraud and to date more than $1 million in Life Dollars has changed hands.
When weather wiped out one of the most important shopping days for local retailers, Philadelphia resident John Durso took action. Durso ran a non-profit, taxpayer funded organization and when the storm hit in 2010, he created Downtown Dollars . Residents can purchase 200 Downtown Dollars for $100 and use them at retailers in Philadelphia. Retailers take the dollars to Durso’s organization where they are paid $2 for every Downtown Dollar they exchange.
This currency was founded by Ecolocity, an organization focusing on urban development. Their goal was to shield Washington DC from any of the negative effects of the struggling economy. Although only a few merchants accept the currency, Ecolocity believes that this three year old way to pay will eventually take off. It as a 1 to 1 exchange rate if you are using it to make purchases but if you cash it out, you only receive 95 cents for every Potomacs  dollar you submit. This incentivizes the holder of the currency to continue using it which stimulates economic growth.
Ithaca Hours  is one of the longest running local currencies and has served as a model for others including Life Dollars. Like most currencies, Ithaca Honors was created to provide an informal bartering system where community members support the economy by buying and selling locally. Ithaca Hours, like Life Dollars, are priced based an hourly wage of $10 per hour.
Although local currencies serve a valuable community service, their use isn’t widespread. In the United States there are only a few hundred local currencies in circulation and of those, a relative few community members and businesses participate. But as local economies struggle to balance their budgets, community members will find ways to prop up their local economies and one of those ways may be the use of local currencies. Want to read about other currencies in circulation? Check out this article.