What Is Community Scrip?

Community scrip — also called local currency, complementary currency, or community currency — is a form of money created and managed outside the national banking system, designed to circulate within a defined geographic area or community. These currencies are not legal tender in the national sense, but they are accepted by participating businesses and residents as a medium of exchange.

The goal is typically economic: to encourage spending within a local economy, support independent businesses, and reduce the outflow of money to national or multinational chains. When you spend a local currency note, the value stays in the community rather than flowing out to distant shareholders or corporate headquarters.

Notable Examples of Local Currencies

The Bristol Pound (UK)

Launched in 2012, the Bristol Pound was one of the UK's most well-known local currencies. Available in both paper and digital form, it was accepted by hundreds of independent businesses in Bristol and could even be used to pay local taxes. While the Bristol Pound wound down its paper operations in 2020, its digital successor continued, and it demonstrated the real-world viability of community currency systems.

The BerkShares (Massachusetts, USA)

BerkShares have circulated in the Berkshire region of Massachusetts since 2006. Backed by participating banks and redeemable in US dollars, BerkShares are exchanged at a small premium, incentivising local spending. This currency remains one of the most successful and longest-running local currency experiments in the United States.

Depression-Era Scrip

During the Great Depression of the 1930s, many American towns and municipalities issued their own scrip when the national banking system froze and cash became scarce. These emergency currencies helped local economies continue to function during one of the most severe financial crises in modern history.

How Community Currencies Are Created

Setting up a community scrip system typically involves several key steps:

  1. Organising body: A non-profit, community interest company, or cooperative typically oversees the currency.
  2. Backing mechanism: Most credible local currencies are backed 1:1 (or similar) by national currency held in a reserve account, ensuring redemption is always possible.
  3. Business network: Participating merchants agree to accept the local currency, forming the ecosystem that gives the scrip its value.
  4. Issuance: Notes (paper or digital) are printed and distributed, either sold at face value or at a small discount to national currency.
  5. Governance rules: Terms for redemption, expiry, anti-counterfeiting, and governance are established.

Advantages of Community Scrip

  • Localisation of spending: Money recirculates within the community, supporting local jobs and businesses.
  • Economic resilience: During national financial crises, a functioning local currency can maintain economic activity.
  • Community identity: Local currencies often feature local landmarks, figures, or themes, building civic pride.
  • Encourages relationships: Spending local currency often means engaging directly with independent businesses rather than automated retail.

Challenges and Criticisms

Community currencies are not without their difficulties:

  • Limited acceptance: Their usefulness depends entirely on how many businesses accept them. A small network limits daily utility.
  • Administrative overhead: Managing a currency — even a local one — requires accounting, fraud prevention, and ongoing organisational support.
  • Sustainability: Several well-intentioned local currency projects have wound down due to lack of funding, participation, or interest.
  • Not legal tender: Businesses cannot be compelled to accept local scrip, limiting its universal utility.

The Relationship Between Community Scrip and Cryptocurrency

The rise of cryptocurrency has renewed interest in non-governmental monetary systems. In many ways, community scrip was an analogue precursor to today's digital community tokens. Both aim to create trusted, community-governed stores of value outside the traditional banking system — though the technological underpinnings are radically different.

Conclusion

Community scrip and local currencies represent a compelling intersection of economics, civic identity, and grassroots organisation. They're not a replacement for national currency — but as a complement to it, they offer tools for strengthening local economies and building community resilience. Their history stretches back centuries, and their future continues to evolve in both physical and digital forms.