The Conditions and Strategies of the Success of Local Currency Movements

Background and Purpose: More than 4,000 local currency systems are in operation worldwide. A primary purpose of local currency movements is to encouraging shopping at local businesses by recirculating money within the boundaries of a discrete geographic community. Despite the high prevalence of local currency movements today, there is little available information about the mechanisms and strategies of local currency movements, which may prevent many communities from establishing these community development movements. This study aims to identify principles of effective local currency movements by analyzing the conditions, strategies, and implementation processes of a variety of successful and less successful movements in different communities.

Methods: We analyze case studies of five local currency movements in the U.S., U.K., and Canada. Selection criteria for inclusion of movements required that they had been in operation for more than two years, and that they were located in English-speaking countries with a relatively common sociopolitical heritage. Three “success cases” were chosen to understand common factors shared by successful movements (BerkShares, B-Notes, and Lewes Pound). Two less successful cases were chosen to better understand counterfactual practices and conditions (Toronto Dollars and Potomac). The sessions consisted of a combination of face-to-face and phone/video-conference interviews lasting approximately 60 minutes. The semi-structured interview focused on about the following categories: initial and current leadership, implementation strategies, challenges, operational issues, and evaluation systems. Two researchers triangulated data collection methods by conducting fieldwork and participant observation in Baltimore (B-Notes) and Washington, D.C (Potomac). Data were transcribed and coded using Atlas.ti software. Analysis followed a grounded theory approach in which transcriptions were inductively coded to identify common themes and patterns related to successful movements.

Results: this study finds that macro-level institutional conditions associated with successful local currency movements include being in small, less populated communities, with comparatively lower levels of household income, and having prior experience with alternative economic movements. Mezzo level of factors include strategies for seeking seed funding, merchant engagement, operational logistics, communication and marketing skills, and employing a full-time coordinator, and engaging a group of leaders.  Lastly, micro level of factors include leadership skills, previous experiences organizing community projects, managements’ commitment to the community.

Conclusions and Implications:

From an ecological perspective, establishing a successful local currency system requires not only investing significant time and resources, but also employing effective movement strategies in suitable environmental conditions. Groups desiring to start local currency movements in their own community may want to carefully compare the institutional conditions of other successful and less successful movements with the environment of their own community. Leaders of potential currency movements may also compare and adopt successful organizational and leadership strategies identified in previous movements to avoid potential pitfalls. .