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Your Take: Would You Use Local Currency?

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Local currency isn’t a particularly new idea but it’s one that seems to be gathering a bit of steam lately as “Main Street” revolts against the enormous financial machine of Wall Street. BerkShares is the most famous of the local currencies, an alternate currency used in the Berkshire region of Massachusetts, but they exist in a lot of different areas. The main motivation behind local currency isn’t that it’s an alternative to the mainstream, it’s that it supports the local economy. I stumbled onto the idea of local currency because I saw a funded Kickstarter program called BNotes, for a local Baltimore currency. With BNotes, you can buy $11 in BNotes for $10 with the hope that local merchants are signed on to use it.

The only concern I’d have is with the legality of local currencies, which I haven’t researched. It would be for businesses to evade taxes, as if it’s not already easy for cash transactions, and if the evasion got to be too extreme, the local government might shut it down (leaving me with some worthless, extra-secure paper).

I’d still use it for the novelty of it all and because it’s fun to support a local venture that is trying to make Baltimore a better and more vibrant place. I won’t be buying hundreds of dollars in BNotes but twenty or thirty wouldn’t be too much… especially if they get wide acceptance.

Would you use a local currency?

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27 Responses to “Your Take: Would You Use Local Currency?”

  1. Hannah says:

    I use Groupons regularly. It’s not all that different. If using local currency saved me money and didn’t carry any extra risk, why not?

  2. cubiclegeoff says:

    I don’t know the specifics in regard to taxes and everything, but I do know that places legally can create their own currencies for use.

    In areas that want to encourage local investment, I think it’s a great idea. I think somewhere here or elsewhere there was a statistic about the percentage of money given to a local vs national store and how much is put back into the local economy, and buying local makes a big difference.

  3. Martha says:

    I wouldn’t use local currency because local currencies carry risk. With US Treasury backed dollar bills I can accidentally leave a $1 bill in my pants, wash them, and store them away for summertime only to find it in 6 months! Then in 6 months my money will still be valid within the USA. I feel like a local currency could be a fad and that in 6 months you could have no place to spend it.

  4. Texas Wahoo says:

    I have never heard of local currencies before, but from the description, they sound a lot like fair tickets…

  5. zapeta says:

    It would be something I’d try as long as it was widely accepted. Keeping the money circulating in my area would probably help the local economy.

  6. billsnider says:

    I know that they use this in Ithaca NY.I refused to use it.

    Paper money works because you have faith in it. When that goes, it becomes worthless. So it is risky. It is also non-tranportable to other areas.

    Also remember that this was one of the issues that led to a strong central federal goverment. States and areas printed their own currency. It made it very difficult to travel and do business.

    Bill Snider

  7. Brandon says:

    I am not sure if I would use it, but I see no real downside to using it as long as it is 100% backed by Federal dollars which in the case of the BerkShare FAQ implied that it was.

  8. skylog says:

    i like the idea, with regards to supporting the local economy, but i just do not think this is something i would utilize.

    pushing all of my fears aside, while i do like the idea of supporting a local economy, i do not like the idea of fragmented currencies. if someone believes in supporting the local economy, just do it with dollars. put your money where your mouth is.

  9. Rosa Rugosa says:

    We frequently vacation in the Berkshires, but only recently became aware of the local currency thing they are doing. We’ll definitely give it a try next time we’re out there, but would convert a modest amount of $$ that we would be sure to use. We do try to buy locally produced stuff even when at home, and on vacation we always try to support small local businesses.

  10. Kevin says:

    I don’t know enough about local currency to know for sure. If the currency was traded at some fixed value for the dollar, I probably would just consider it a waste of time. However, if the exchange rate shifted, I might keep a stash of it in my pocket, and when the prices of goods were more favorable with the local currency (according to the rate I originally got it at), I would pay for it in that to save a few cents.

    • cubiclegeoff says:

      Most places that do this don’t have a 1:1 exchange rate. Usually you get a discount when using the local currency, so you get a better deal.

  11. Using a local currency isn’t a good idea from an economic standpoint b/c it creates inefficiency: you have to create a new currency and use a part of your “mind share” on learning about it, buying it, and understanding it. It also isn’t efficient b/c w/ a national currency, you can purchase good all over the country, which increases competition among suppliers. W/ a national currency it’s also easier to compare goods b/c we have been doing so for years and converting to and from a new “local” currency may make us not understand what the prices really mean (which also make make us less apt to purchase things). It’s a fun idea and I would buy a little bit of “local” currency for fun, but it’s not something that should be used extensively, and I don’t think these kinds of things will become popular.

  12. Shirley says:

    Our local supermarket did this with Scrip and it was a huge success. Any local non-profit organization could buy the Scrip at 5% off and then sell it for face value. The Scrip was then used at any one of that market’s several stores.

  13. Glenn Lasher says:

    Yes, I would. As a small business owner, I would also accept them, provided that I could spend them on what I need for my business. I tend to favour small local businesses when I can anyway.

    Incidentally, I think that the reason these currencies are legal is because of the commerce clause. The Federal government lacks jurisdiction because the commerce is, by definition, intrastate.

    Now, if, for instance, some places in Eastern New York started taking BerkShares, then there might be a problem.

    In the event that it became a problem, I suppose that they could convert the local currencies to some variety of electronic currency (like a debit card) and have it become legal that way. It would require an “in” to the financial system, though, which sort of defeats the purpose. Perhaps if a small credit union were to back it, though, it might work.

  14. Donna says:

    Some of our local Main Streets have adopted this idea – Collingswood, Haddonfield (NJ), primarily during the holidays. When I’m employed again I will use it!

  15. daenyll says:

    the potential risk of buying into a program that could easily be shutdown outweighs the slight discount from federal currency. But we should also remember that the federal currency only holds value so long as the government says it does, and that value clearly isn’t fixed. Really if you want to support local business, just support local businesses, and using cash rather than debit/credit saves them the fees for your business.

  16. This represents a step backward into the 18th century. For a long time, towns, regions, states, and Indian reservations had their own currencies. Do we really want to regress to a time when you had to change coinage every time you took a trip across the country?

    While it sounds kinda cool, there are a number of disadvantages:

    * Tax evasion — Say what you will, we live in a body politick that has to be supported financially, and it derives its financial support from citizens paying into the kitty through taxation; we don’t like paying taxes but we sure like using the roads, bridges, schools, and libraries our taxes pay for.
    * Clumsiness
    * Risk of devaluation
    * Inefficiency
    * Waste of time and energy as consumers and sellers try to figure out what a price “means” in terms of the currency they’re accustomed to using

    If you want to support your local economy, buy local. That’s easy. A heckuvalot easier than making everybody use a bunch of different currencies!

    • cubiclegeoff says:

      Don’t think the tax evasion argument works here. You can’t pay taxes with the money to the state or federal government, it would need to be converted back to the national currency.

      Clumsiness is a vague statement that means nothing.

      It’s pegged to the US Dollar, so don’t see this problem. They could change the exchange rate, but since that would cause a lot of local problems, it’s more likely that they’d phase it out instead.

      Slightly inefficient since you would need to convert at the local bank. But if you go to the bank anyway, not a big deal.

      Not sure there would be much confusion, except for the people that don’t know about the local currency.

  17. Tony says:

    How is “local currency” any different than say, a mall gift card? You can only spend the funds on the gift card at the mall, no place else.

  18. echidnina says:

    I definitely would, if there were such a program in my area – I read about the Brixton Pound, which I would love to participate in if I were more local to that part of London. I think the analogy to giftcards is apt. It’s encouragement to spend your money locally; it’s advantageous to you and to local businesses.

  19. Jason L says:

    Currency is only valuable because people all say it’s valuable. The real danger in using local currency is that there would be a risk (I would imagine) where certain groups in the local vicinity say that it isn’t valuable. That alone would make me a little cautious about using it…

    • cubiclegeoff says:

      Not everyone probably participates in the program. But since you get the money at the bank, if it’s a problem, you just convert it back to US dollars.

  20. thunderthighs says:

    I use Groupon. I might consider local currencies if they weren’t too much trouble or hassle to use.

  21. Strebkr says:

    It sounds interesting enough for me to use it a few times to see what the fad was. I wouldn’t go out and drop $1,000 on it right away though.

  22. Strebkr says:

    Are there any places in Ohio that do this?


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