Local currency refers to the official currency of a particular country or region. It is the currency that is commonly used for transactions within that country or region and is typically issued by the central bank of the country. Local currency is often used as a medium of exchange, a store of value, and a unit of account.
A local currency is a currency that can be spent at participating organizations in a specific geographical location. A regional currency is a type of local currency that covers a larger geographical area, whereas a community currency may be local or used for exchange within an online community.
For example, the United States dollar is the local currency of the United States, the euro is the local currency of the Eurozone, and the Japanese yen is the local currency of Japan. The value of a local currency is often determined by various factors, such as the strength of the country’s economy, political stability, and global demand for the currency.
A local currency, rather than replacing a national currency, aims to encourage spending within a local community, particularly with locally-owned businesses. Such currencies may not be backed by a national government and may not be legal tender. The Complementary Currency Resource Center’s global database includes approximately 300 complementary currencies, including local currencies.
The use of local currency is often encouraged as a way to promote local economic development, as it keeps money circulating within the community and supports local businesses. Local currencies can also be used to promote sustainable and socially responsible practices, such as fair trade and environmental stewardship.
Some examples of local currencies include the Bristol Pound in the UK, the BerkShares in Massachusetts, USA, and the Chiemgauer in Germany. In some cases, local currencies may be pegged to another currency, such as the U.S. dollar, to help stabilize its value. Additionally, some countries may have multiple local currencies in circulation, such as the euro and the Swiss franc in Switzerland.
