The first experiences with local currencies date back to 1930 and their emergence is associated with the effects of the Great Depression, a historical and economic period during which, in the USA, several cities paid municipal workers with a local currency.
But what are local currencies? They are currencies valid only in a given region, which boost commercial exchanges and favor short circuits of exchange.
Some of their characteristics are as follows:
- They have, at their genesis, the promotion of activities that do not value money, nor its accumulation, but rather its circulation, thus contradicting the capitalist logic. An example of this is the Lixo local currency, which circulates in the parish of Campolide, in Lisbon, and which encourages traders who receive the local currency to use it for their own purchases, keeping the currency circulating in the parish.
- They foster cooperation and social relations, coexisting in an economic system in which conventional currency is maintained, as is the case with the Palmas local currency in Brazil.
- They can play an important role in combating the weakening of local economies and community ties (see the case of the recently defunct Bristol Pound, which operated in England for several years).
- They can be a potential solution to problems of access to essential goods to meet basic needs, as is the case with the Santo António local currency, created by the Santo António Parish Council in Lisbon and used in the Valor Humano social grocery store. In this social grocery store, the beneficiaries of social support from the Junta de Freguesia can buy food, toys and hygiene products, paying with the local currency.
- Local currencies also have characteristics that favor self-sufficiency and self-supply of local communities, avoiding dependence on imported food and environmental pollution resulting from the process of transporting these goods. A good example is the local currency Tear, created in Covilhã by the cooperative Coolabora, which organizes the "Troca a Tod@s" exchange market, where local products are sold.
- These currencies also correspond to the desire that individuals have to reconnect with the community by establishing more personal contacts and also to restore reciprocity to economic relations. An illustrative case of this is the Comunitas local currency, created in Fundão: the Mercearia Comunitas employs young people in situations of social exclusion, who ensure the operation of this grocery store.
Thus, creating a local currency can have the potential to be a social innovation, since it stimulates local commerce and the economy and, because traders can exchange the currency with each other, they establish (or strengthen, if they previously existed) bonds of trust between them.
Some authors question the sustainability of these currencies, noting that the use of local currencies in a sustainable way is uncommon. Local currencies are not always integrated into long-lasting and wide-ranging projects, and this can be an obstacle to their sustainability. The short duration of these currencies also seems to suggest that the moral motivations of individuals to join local currency initiatives are not robust enough to last for long periods. Some authors note that the creation of local currencies in Portugal has been rapid, but their survival rate is fragile. Many of the experiences with local currency in our country have been short-lived, which indicates that local currencies may be somewhat of a fad.
Despite these considerations, the potential virtues of a local currency seem to outweigh them. The use of a local currency enables the economy to relocate, individuals to establish relationships of trust and partnership with each other, support for local production and producers, as well as the consumption of locally produced products. There are environmental gains, because consuming what is produced locally reduces the emission of harmful gases into the atmosphere, which is the result of the transportation of goods and merchandise. In times of post-pandemic, local currencies are strengthening their function of reinforcing social ties and strengthening solidarity within a community. It also seems plausible to us that local currencies advocate the substantive meaning of the economy enunciated by Polanyi, insofar as their activities bring people together and try to find solutions to the problems of local communities, while raising awareness among consumers and encouraging them to buy local products. In this way, local currencies not only demonstrate their potential for innovation, but also contribute to economic and environmental sustainability and the achievement of the Sustainable Development Goals (SDGs), specifically SDG11 - Sustainable Cities and Communities and SDG12 - Sustainable Production and Consumption.
