Time for a Local Currency?

Tired of seeing all of your dollars leave town? Convinced that your retail expenditures only support someone on Wall Street or at Wal Mart headquarters? There are a number of communities interested in making sure that your expenditures stay in the local economy. They've done that by creating their own local currency.

Believe it or not, it isn't against the law create your own currency. A national currency was established around 100 years ago as a convenience--but it also made every region of the country more vulnerable to the ups and downs of the national economy.

An article in the Los Angeles Times (click here) today talks about the growing trend of communities creating their own currency. Here's an excerpt from the article.

"Right now there's a lot of interest because of the economy, but a lot of these efforts come about to rebuild social capital," said Ed Collom, a sociology professor at the University of Southern Maine who studies local currencies. "There's been concern about lack of trust, neighbors not knowing each other. They see this as a way of neighbors helping each other.

"In Detroit, for example, the Cheer was created not due to the city's chronic financial woes but because bar owner Jerry Belanger wanted to encourage patrons to support new local businesses. He issued notes good at neighborhood merchants, backed by a cash reserve at his bar. The idea caught on fast, and other taverns agreed to help back the currency. There are now $3,000 worth of Detroit Cheers in circulation after about four months."It's like a wink or a secret handshake," Belanger said. "People want to demonstrate they care about the community."

In Mesa, Ariz., a city of 450,000 east of Phoenix, the motive has been purely financial. The city has no property tax and relies almost exclusively on its sales tax for revenue. Receipts plummeted 12.5% in the last quarter of 2008. Johann Zietsman, director of the city's Arts Center, noticed that only 30% to 40% of seats were selling as people tightened their belts.

Thus Mesa Bucks were born. Shoppers who spend money at stores in the city limits can bring their receipts to the Arts Center and receive a percentage of the sales tax they paid as Bucks. Right now the currency can only be spent at the Arts Center and city museums, but officials are talking with two malls about distributing them and believe some local merchants will accept Bucks.

I'll be watching this trend more closely. It may be a project for our local businesses to consider as the economy continues to suffer.