Editing Currency (section)

== Local currency ==
{{main|Local currency}}

In economics, a local currency is a currency not backed by a national government and intended to trade only in a small area. Advocates such as [[Jane Jacobs]] argue that this enables an economically depressed region to pull itself up, by giving the people living there a medium of exchange that they can use to exchange services and locally produced goods (in a broader sense, this is the original purpose of all money). Opponents of this concept argue that local currency creates a barrier that can interfere with [[economies of scale]] and comparative advantage and that in some cases they can serve as a means of [[tax evasion]].

Local currencies can also come into being when there is economic turmoil involving the national currency. An example of this is the Argentinian economic crisis of 2002 in which [[IOU (debt)|IOUs]] issued by local governments quickly took on some of the characteristics of local currencies.

One of the best examples of a local currency is the original [[LETS]] currency, founded on Vancouver Island in the early 1980s.  In 1982, the [[Bank of Canada|Canadian Central Bank]]'s lending rates ran up to 14% which drove chartered bank lending rates as high as 19%.  The resulting currency and credit scarcity left island residents with few options other than to create a local currency.{{refn|{{cite podcast| format = [[MP3]] | url=http://media.blubrry.com/extraenvironmentalist/p/extraenvironmentalist.com/audio/low/Ep45_final_lowbitrate.mp3 |title=Opening Money |website =The Extraenvironmentalist  |access-date=December 29, 2016}}<ref>{{cite interview |last=Linton |first=Michael |last2=Bober |first2=Jordan |interviewer=Seth Moser-Katz |interviewer2=Justin Ritchie |title=Opening Money |url= http://www.extraenvironmentalist.com/2012/07/11/episode-45-opening-money/ |date=November 7, 2012 |work=The Extraenvironmentalist |access-date=December 29, 2016}}</ref>}}