Local / independent currencies: introduction

“We should be moving toward local currencies not global or European currencies.” – David Korten

What are local / independent currencies?

Sometimes called alternative, complementary or community currencies, local / independent currencies are currency schemes that are created and run by communities to run alongside the dominant national currency. Independent currencies can be used to purchase goods and services locally, but are not legal tender (i.e. they can’t be used to pay taxes).


The Brixton Pound’s orginal shop front.


In the early Middle Ages in central Europe, thin metal coins/tokens called bracteates were made and distributed locally. These were recalled regularly, often annually, with a small deduction – enough to dissuade people from holding on to them, and to persuade them to spend them into the local economy instead.

As nation-states were formed, they tended to introduce a centralised monopoly on the issuing of the currency. During the English Civil War, the state lost control of the supply of money, and local traders stepped in to produce tokens for local goods and services. These local tokens were banned when the monarchy was restored.

In the remoter areas of the US in the 18th and 19th centuries, workers in logging or mining towns were often paid by their company in ‘scrip’ – vouchers that could be redeemed in the company store. Unfortunately, these schemes didn’t really aim for the same benefits as modern schemes, and the companies raised prices in their stores to fleece their workers, who had no alternative sources for the necessities of life. This practice didn’t become illegal until the middle of the 20th century.

Interview with Stephen DeMeulenaere, Canadian complementary currency specialist and founder of the Complementary Currency Resource Center.

Independent currencies have often been set up in reaction to hardships caused by economic crashes or conflict. For example, several schemes were set up in Germany and German-speaking countries between the wars, during the Great Depression. The town of Wörgl in Austria was the venue for a famous experiment with a local currency in the early 1930s. The town managed to buck international trends, increase employment, eradicate inflation and allow infrastructure projects and new businesses to bloom, and was so successful that 200 other municipalities lined up to copy it. The central bank panicked at its potential loss of monopoly, and ’emergency currencies’ like Wörgl’s were banned.

Since the 1950s, alternative schemes including mutual credit have been big in South America. In the 90s, the Banco Palmas was formed in Brazil, which influenced the development of independent currencies in the UK. A fishing community was moved inland to slums to free up land for sea-front properties, so they were forced to set up new enterprises. They found that any funds that entered their community soon left again as it was spent elsewhere, or was siphoned out from the branches of corporations. They created a community bank with their own currency, and money stayed in their local community, so that local people could start their own enterprises, which helped divert money away from the corporate sector even more – and so on, in a virtuous circle that saw their community develop.


Tokens issued in Southwark by John Ewing (a local tobacconist) during the English Civil War.

After Argentina’s crisis that saw its national currency crash, many local currency schemes appeared, holding value in local notes rather than the state currency (which didn’t hold its value at all). In the end, people saw that you can’t feed and shelter yourself with paper – only what you can exchange for it.

In the UK, the first local currency scheme was launched in Totnes, Devon, in 2007, via the Transition movement. 300 Totnes pounds were printed and sold for the same amount of Sterling, and were redeemable with a handful of local businesses. Later the same year, another 6000 were printed and another 50 shops and businesses joined in. Schemes followed in Lewes in 2008, Brixton in 2009 (followed by electronic currency in 2011), and Bristol in 2012.

How local currencies give value for money – TEDx talk, Brixton.

Local currencies today

Now there are over 40 schemes in the UK, and around 5000 internationally. There are so many types that it can almost be said that each scheme is unique. In Hull they have a cryptocurrency called Hull Coin, based on blockchain technology. Spice Time Credits is a form of time banking that is national, and can encourage community volunteering. In Cardiff, the local football club, Cardiff City are part of it, and for a few hours volunteering in (say) the local library, you can get a free ticket to watch them play. As well as time banks, LETS / barter schemes are similar to local currencies, and in Hay-on-Wye, they set up a voucher scheme, with gift vouchers that can only be used locally – in effect, a local currency (apart from the fact that traditionally, vouchers are redeemable with one company, but local currencies can be used at any participating business). Different schemes work better in some areas than others, depending on local circumstances.


The Totnes Pound goes electronic.


One day, Bristol Pound got a call from the Bank of England, who sent people to visit. They were worried that people might get confused between Sterling and the local pound, but they ended up being quite positive, and for their own purposes, classifying them as gift vouchers. Currencies have to be regulated by the Financial Conduct Authority’s e-money payment regulations if they’re electronic, and in Bristol, they’re regulated via their relationship with the Bristol Credit Union.

This can be a barrier to smaller schemes, and in Exeter, they are restricted to paper money, as they haven’t been able to get the local credit union involved. Currently, Bristol are registering themselves as a small e-money institution, regulated by the FCA, after which they can offer regulatory assistance to other schemes, or allow them to operate under their regulatory protection so that they don’t have to go through the complicated registration process themselves. The FCA appear to be quite open to the idea, and happy to support innovative financial products.

Local currencies go through business accounts the same way as Sterling, and tax is paid on transactions and income in the same way (but in Sterling, of course). As far as the accountant is concerned, it’s just money.


What are the benefits of local / independent currencies?

Most money in any community these days is spent in corporate outlets: supermarkets, coffee shops, banks, petrol stations etc. A large percentage of this money leaves the community immediately, to pay for head offices, distribution networks and especially to pay dividends to shareholders (these are sometimes called ‘extractive’ companies, as they extract money from individuals and communities). Local currencies do the opposite – they stay in local communities, and are spent over and over again, strengthening the local economy (via the local multiplier effect).

Local currencies are intended to be spent, not saved or lent, and therefore they accrue no interest and there is no inflation or speculation. They only work when used – a local currency is a means of exchange, not a store of wealth. National currencies accumulate interest and can be invested for profit, and so are almost designed to be hoarded. Poverty is by definition a lack of money, but if the control of the money supply is out of your hands, and it is at the same time being hoarded by the rich (again, this is by definition true), then some people are going to be poor. But this doesn’t mean that they don’t have useful work to offer, and so local currencies and mutual credit systems can alleviate poverty by allowing people to work to acquire the goods and services they need in their communities without any legal tender changing hands.

However, local currencies are bought with, and can be redeemed for the national currency – i.e. they are ‘convertible’. This model means that the control of money remains with banks, which is problematic for many reasons.

Why use the Bristol Pound?

But the benefits are more than economic. Yes, they encourage people to find and support local businesses, but they also strengthen communities through personal contact as well as money. There’s a personal quality to interactions with a local business that isn’t possible with a corporate branch, where not only do the staff not have time to chat, but they’re not generally knowledgeable about the business, and frankly, don’t care.

A community based on small, local businesses has a unique flavour, rather than the typical, bland High Streets full of corporate outlets, resulting in a nation of ‘clone towns‘. Furthermore, small shops create far more (and far more interesting) jobs than superstores; plus supply chains are shortened, reducing emissions and environmental damage.

There are also educational aspects to alternative currencies – about what money actually is, how it travels through and out of communities and who controls it.


The world’s first local currency vending machine – dispensing Brixton Pounds in Brixton Market.

What can I do?

Join a scheme

Check the Independent Money Alliance website, or get in touch with them to see if you have a local scheme in operation or in formation.

Start a scheme

Do some background reading first if you want to get a team together to start a community currency.

The difficult part of setting up a local currency scheme, according to the people who’ve done it, is to get your community prepared to support it. The actual printing / electronic / regulatory tasks are not that difficult, especially with the help of the Bristol Pound (see above). It seems to be easier in smaller towns, probably due to greater community cohesion, and the advice is to start small and then try to draw more people in.

To improve your chances of success, you could get in touch with an existing scheme and offer to volunteer. You’ll learn a lot from the inside.


A selection of local currency notes from various countries.

Paper-based currencies are made available from local outlets (including a vending machine in Brixton), and with electronic currencies, locals sign up for an account online or via mobile apps. Sterling is paid in, and local businesses take payments in the local currency. Incentive schemes can include local businesses offering discounts for payments in local currencies, or discounts offered when currency is purchased. Totnes have offered Totnes pounds for £9.50, and printed £21 notes costing £20 Sterling.

Thanks to Graham Woodruff of the Independent Money Alliance for information.


The specialist(s) below will respond to queries on this topic. Please comment in the box at the bottom of the page.

Graham Woodruff founded the Independent Money Alliance in 2014 to help launch independent currencies. He is the CTO at Bristol Pound, the UK’s only city wide currency and is responsible for their innovative electronic currency. He is also a director of the Real Economy food project, co-founded the Bristol Drawing School and is a fellow of the RSA.

We'd love to hear your comments, tips and advice on this topic, and if you post a query, we'll try to get a specialist in our network to answer it for you.