Monday, August 4, 2008

Local currencies build local economies

To build a strong local economy, we need to support local small businesses and help them grow.

Using a local currency is a creative way to strengthen a community and help local businesses thrive in the face of competition from the Internet, big box stores, and chains. A local currency is like regular money, but can only be spent locally, and only with businesses that accept it -- which tend to be independent small businesses.

I first read about the use of local currency about 10 years ago, but had pretty much forgotten about the idea until a recent trip to Washington state.

At a coffee shop in Port Angeles, I noticed a sign advertising the town's "Downtown Dollars" program. The dollars can be spent like cash -- but only in the local businesses that accept them.

New England's Berkshire region has a similar local currency called BerkShares. People exchange U.S. dollars for BerkShares at participating banks. For every $90 in federal money, they get 100 BerkShares, which they can spend just like cash in any business that accepts them. That means consumers get a 10 percent discount -- $100 worth of goods or services for $90. Here's an illustration of how it works.

This isn't something new. According to the E.F. Schumacher Society, sponsor of the BerkShare program, "local currencies were widely used in the United States in the early 1900s."

There are many ways to help build a stronger local economy. This might be one of them.

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