Local Currencies: A Tool for Economic Growth in the African American Community

Local currencies, also known as community currencies, are a type of complementary monetary system used in a particular locality or community. They work alongside national currencies rather than replace them and are typically not legal tender beyond their specific region or community. They have gained traction globally as a tool for stimulating local economies and promoting sustainable community development.

Benefits of Local Currencies

The concept of a local currency is particularly beneficial in economically marginalized communities, including African American communities, which often suffer from structural economic disadvantages. Here are some of the potential benefits:

1. Stimulating Local Economy: A local currency keeps money circulating within the community, helping to stimulate local economic activity. This means that when people spend their local currency, they're supporting local businesses, which in turn leads to job creation and economic growth within the community.
2. Community Development and Empowerment: Local currencies empower the community by fostering a sense of pride and identity. They encourage people to invest in their community, strengthening social bonds and making it more resilient.
3. Local Resource Utilization: Local currencies can encourage using local resources and services, reducing dependence on imports and promoting sustainability.
4. Financial Inclusion: Local currencies could potentially increase financial inclusion by providing an alternative form of money for individuals with limited access to traditional banking and financial services.

How To Use Community Currencies

In the context of the Black community, local currencies can be instrumental in combating economic inequality and promoting local economic growth. Here's how:

1. Supporting Black-Owned Businesses: Local currencies can incentivize patronage of Black-owned businesses. This support can provide these businesses with a much-needed economic boost and help close the racial wealth gap.
2. Creating Economic Opportunities: Using local currencies can create jobs within the community, providing employment opportunities and reducing economic inequality.
3. Fostering Resilience: By keeping money within the community, local currencies can foster resilience, helping the community weather economic downturns.
4. Promoting Economic Self-Sufficiency: Local currencies can contribute to economic self-sufficiency by reducing reliance on external economic systems that may not adequately serve the community.

Local Currency Impacts on the African American Community

In the African American community, local currencies can be particularly beneficial for several reasons. First, due to systemic racism in America, Black people have a higher likelihood of living in low-income communities, which traditional financial institutions often underserve. Local currencies can provide a way for people in these communities to access and circulate money, which can help to stimulate local economies.

Second, African Americans are more likely to be entrepreneurs. Local currencies can help to support these entrepreneurs by providing them with a way to market their goods and services to a broader audience.

Finally, local currencies can help to promote economic resilience in the African American community. By keeping money circulating within the community, local currencies can help to protect people from the economic shocks that can disproportionately impact African Americans.

There are a number of different types of local currencies, each with its unique benefits. Some popular types of local currencies include:

• Time-based currencies: These currencies are based on the concept of time rather than money. For example, one hour of work might be worth one time-based currency.
• Local exchange trading systems (LETS): These are networks of people who exchange goods and services with each other. LETS systems are often used in conjunction with local currencies.
• Community currencies: These are issued and used by a specific community. Community currencies can be based on various principles, such as sustainability or social justice.

Examples of Community Currency Being Used Today

BerkShares are a local currency launched in 2006 in the Berkshires region of Massachusetts. BerkShares are issued at a slight discount to incentivize usage. For example, 100 BerkShares can be bought for $95 in federal currency. Businesses that accept BerkShares can use them to purchase goods and services from other participating firms, pay salaries, and support local non-profits.

BerkShares can help to boost local economies, build community, and promote sustainability. BerkShares can be challenging to scale up to a large size, and all businesses may not accept them.

Despite these potential benefits, implementing local currencies faces several challenges, including acceptability, legal issues, and the difficulty of maintaining their value. Nonetheless, with proper design and regulation, local currencies can be a powerful tool for promoting local economic growth and resilience in the Black community.

In Summary

Local currencies can potentially be a powerful tool for promoting local economic growth and resilience in the African American community. They can help to stimulate local economies, build community, and promote sustainability. However, some challenges need to be considered when implementing local currencies, such as acceptability, legal issues, and the difficulty of maintaining their value.

If you are interested in learning more about how local currencies can benefit the African American community, please contact us today for a 1-on-1 consultation. We would be happy to discuss the specific needs of your community and help you develop a plan to implement local currencies.