Everything You Need To Know About Local Currency

Everything You Need To Know
About Local Currency

It is no coincidence that local currencies have rapidly risen to prominence in the last few years. Alternative means of exchanging time and goods were necessary to plug the gaps when conventional money became more scarce. A growing body of global evidence supports the idea that local currency  is able to meet the needs of local areas and economies in ways that dollars, euros, and pounds cannot. Keep reading to find out everything you need to know about local currencies and how they are affecting sustainable travel. 

What Is Local Currency?

Local currencies are a form of money that circulate locally and at a community level. They work as a complement to legal currency. These community projects are usually accepted by local traders of all kinds, and they also give residents an incentive to shop locally. As a result, these local currencies help communities or regions strengthen and decarbonize their local economies. Local money also  helps build community spirit while reducing people’s carbon footprints and improving local economic resilience.

Keep in mind that local currency is not a legal tender, so businesses do not have to accept them in exchange for goods or services. Most local businesses have agreed to be part of the community project currency trader network. While euros, dollars, or pounds will always be necessary for national and international trade, it’s becoming more popular to promote local money and strengthen the local economy. 

How Does Local Currency Work?

Local currency movements are becoming increasingly popular thanks in part to their ability to create and exchange within the community.  The most sustainable economy would be one where the goods consumed in a region are produced in the same region using local resources, local labor, and local money. But how does it work?

Businesses and residents exchange legal tender for local currency at a participating local bank or at the issuing organization.  Because the local money use is limited compared to legal tender or cash, these currencies are usually offered at a discount. As an example, $1 of community currency might be bought for 90 cents.

Benefits Of Local Currency For Travelers and Locals

There are several benefits to these community projects. In fact, local currencies encourage consumers to shop at local businesses because they are the ones accepting the local money. 

In addition, local currency reduces the carbon footprints of the community, as local businesses are more likely to buy from local suppliers. This reduces the amount of time the goods have to be transported, and therefore reduces the carbon footprint. 

Community Currencies 

Bunji – Japan 

A community project was introduced using a local currency in Kokubunji, a city in Tokyo Metropolis, to reform the kind of society where money is king.  Local money encourages people to think of those who provide them goods and services, and puts less emphasis on traditional legal tender. 

The city established the Bunji, their local currency in 2012. This local money originated from ‘tickets for fun’ that were previously issued for an event called the Bun Bun Walk, in which people strolled the city to discover its attractiveness.

The Bunji is now the size of a business card, and easily fits into your wallet. One hundred Bunji have an equivalent value of 100 yen (or around 99 US cents) and can be used at about 25 shops in the city. There are currently around 10,000 Bunji bills in circulation, and this local currency is used by around 250 people in one way or another. 

The Bristol Pound – England 

The Bristol Pound was also introduced in 2012 by a group of campaigners and financial activists. This community project is comprised of a network of +2000 individuals and independent businesses who used digital and paper currency to trade in Bristol. The idea was to keep the supply chain localized, all while keeping local money circulating in the city.

This community project is now on a new level, under the name Bristol Pay.  The local currency now promises to allow direct payments to other account holders through an online portal where users can pay in-store with the app or card. This makes using the Bristol Pound much more convenient. 

Chiemgauer in Bavaria, Germany

Home to one of the world’s most successful local currencies is Germany’s Rosenheim-Traunstein region. Beginning in 2003, an economics teacher began the chiemgauer as a school project.  The teacher wanted to instill a sound financial education to a group of 16-year-olds in a unique way. 

The teacher and his students designed the banknotes, did the administration, and managed the accounts. They essentially created their own local money to be used in businesses and shops in the area. 

The local money is worth one euro per chiemgauer, and there are notes from 1 to 50 euros available. The local currency chiemgauer is only valid for three months after purchase, and this ensures it will be spent, instead of being saved. Making it perfect for travelers like you! 

One of the greatest takeaways from the use of local currencies is that it truly is a way of facilitating keeping money within the region where it is earned. This helps take down the communities carbon footprint and local currencies help raise a flag on the identity of a region, which attracts travelers. Give local money a try on your next trip!

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