Frequently Asked Questions - Community Currencies

Q: How would a community currency strengthen our local economy?

A: Money can be understood in terms of its flow or its circulation within an economy. Every time a dollar is spent in your community, it allows for someone else to spend that dollar again somewhere else. In a resilient local economy, that dollar could be spent many times locally, maintaining and growing the wealth of that community. However, most of our dollars these days flow out of our communities as soon as they are used, enriching national and multinational companies far away from where the money is spent. A community currency is inherently limited to a particular place or group, so it incentives people to shop at locally-owned businesses and keeps wealth flowing within the community. This is called the multiplier effect.

Q: How are community currencies different from Bitcoin and other virtual currencies?

A: While Bitcoin is a potentially disruptive technology, it is primarily designed to be global and anonymous, while community currencies are designed to be rooted in a specific place and increase personal relationships. Likewise, Bitcoin's value is based in scarcity, and is subject to wild speculation and concentration in the hands of a few wealthy investors. Community currencies are designed to increase the circulation of goods and services and primarily function as a means of exchange, rather than an investment or store of value. 

Q: Do I still have to pay taxes on purchases made with a community currency?

A: Complementary currencies are subject to sales and income tax in the same way that dollars are, and those taxes are always paid in dollars. Particularly with the development of electronic currencies, online accounting systems make it easy to keep track of one’s expense, manage an account, and prevent tax evasion.

Q: Where can I find out more?

A: There are a variety of online resources with more information on local currencies. Visit these links for more information:

CommunityCurrenciesLaw - Sustainable Economies Law Center’s online legal resource library containing further information and links to a wide range of resources considering the legal aspects of community currencies and barter systems. - Resources developed by the UK-based New Economics Foundation exploring the dynamics of a local economy and how currencies either keep money circulating locally or allow it to leak out.

Schumacher Center for a New Economics - Reference material, publications, and a directory of currencies across the US from the founders of the BerkShare. - Homepage of Bernard Lietaer, one of the world’s foremost experts on community currencies and monetary systems.

For more resources and references, visit our Resources page at

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