Posted in Finance, Accounting and Economics Terms, Total Reads: 358
Definition: Community Currency
Community Currency is the local currency which is used instead of national currency. This is used for transaction by local businessman. The currency is used in community level and is traded at an exchange with national currency. The spread of this currency is generally to do with the acceptance by local businessman especially the retailer. This is used to promote local business and to thwart the spread of big conglomerates.
The local banks participate in the exchange of currency and the exchange rate is predetermined. Suppose the rate fixed is 1$ will 1.1$ of community currency. The discount provided is for encouraging local to trade the currency. The tax laws and the accounting method employed is slightly different and this is the trade of for enhancing the prospective of local business. The currency created circulates in the community and helps local businessman to make repeat business.
It not only helps in local economic development but also builds social capital and promotes self-sustaining life style. Only central government is in authority to provide the currency. The concept was introduced during the great depression which saw the introduction of quarters , half-dollars and such other local currency.