Homegrown Currencies Are Popular Right Now, But Do They Work?

Remember the Downtown Dollars that Ardmore, PA sold to its citizens this year? Sara Lepro at American Banker looked at that and other “homegrown currency” experiments happening across the country, which are intended to stimulate the local economy and take advantage of “a growing ‘localism’ movement.”

Research suggests that these programs flare up in times of financial distress but quickly fade once the economy improves. However, some experts believe the growing “localism” movement could fuel a more lasting commitment to the concept.

“There is a lot of concern about the lack of community in this country,” said Ed Collom, a University of Southern Maine sociologist who has studied local currencies. ” ‘Local’ is a hot topic, and that’s why local currencies will continue to grow.”

Collom told American Banker that he estimates there are currently more than 200 homegrown currencies in circulation in the U.S.

It’s unclear, however, whether the programs actually work: Lepro notes that Berkshire Hills Berkshares and Ithaca’s Ithaca Hours are well known even outside their towns, but not widely used by locals.

“Distrust of Banking System Sows Return of Homegrown Currencies” [American Banker]