The towns that invent their own money

Yahoo

09-05-2025

In 1932, the small Austrian town of Wörgl was buckling under the weight of the Great Depression, with crumbling infrastructure, rising unemployment and ballooning debt. But within just a year, all that changed: Local unemployment dropped by 25 percent despite rising by 19 percent in the rest of Austria and tax revenue skyrocketed, fueling extensive municipal investment in road repair, a new bridge and even a ski jump—a transformation that is still referred to today as "the Miracle of Wörgl."
Unsurprisingly, the miracle was made possible by money, but not the shillings issued by the government. Instead, the town started circulating its own currency—called "labor certificates" to avoid the scrutiny of the central bank—in the summer of 1932. The certificates could be used in local businesses, as well as for the payment of taxes, rent and utility fees. Designed to depreciate one percent per month to incentivize spending, the money circulated as much as 12 times faster than the conventional currency according to some estimates, creating far more value and employment in the process, Reasons to be Cheerful explains.
In the summer of 1933 the town's mayor, Michael Unterguggenberger, presented his scheme to a gathering of 170 other local mayors interested in replicating it. In response, the central bank promptly outlawed the currency. But Wörgl had already cemented its place in economic history.
Community currencies—alternative forms of money sometimes also referred to as local or regional currencies—are as diverse as the communities they serve, from grassroots time-banking and mutual credit schemes to blockchain-based Community Inclusion Currencies.
In Wörgl, Unterguggenberger based his currency on the writings of German economic thinker Silvio Gesell, which also inspired other community currencies across the U.S., Canada and Europe during the Great Depression. According to one estimate, 118 local governments, 80 business groups and around 70 self-help organizations issued their own currencies in the U.S. alone, and in 1934 a group of Swiss entrepreneurs launched the WIR, which is now the biggest and longest-running local currency worldwide: In 2009 it included 68,000 member businesses and had an annual turnover equivalent to 1.6 billion Swiss francs.
Community currencies have a long history. Premodern monetary systems often distinguished between internal and external currencies—one for domestic economy and the other for foreign trade—and local currencies were common until the 19th century, when the newly emerging nation states transitioned to a centralized system of government-issued money as a way of consolidating their power and stabilizing the economy.
Even so, local currencies continue to crop up, especially in times of economic crisis when people lose their jobs and conventional money becomes more difficult to access. "People come together and say, 'Well, I still have the needs that I had before, and I still have the skills that I had before,'" says Ester Barinaga, an expert on complementary monetary systems at Lund University in Sweden. "The only thing missing is the money to connect these needs with the idle resources."
Since community currencies come in so many different forms and are often short-lived and undocumented, it's impossible to say how many there are worldwide, says Barinaga. In 2015, it was estimated that almost 400 of them are active in Spain alone, and across Africa blockchain-backed systems, like the Sarafu in Kenya, help underserved communities do business without conventional money. Elsewhere, local currencies like the Brixton pound in the U.K. or BerkShares in Massachusetts are a way to keep money in the community, buffering it against the pressures of a globalized economy.
This is the case in Langenegg, an Austrian village some 200 kilometers west of Wörgl, where the village grocer retired in 2008 without a successor. While there are plenty of supermarkets within a short driving distance, the residents understood that local businesses are about more than convenience—they serve as meeting points for the community. Losing that has a knock-on effect on village life, says resident Christian Nußbaumer: "People lose contact, they lose the sense of togetherness."
To prevent this, the municipality bought a plot of land and built a new village store on it. "But we knew it was not enough to just put up a building and find a tenant to run it," says Nußbaumer, who is part of the citizens' committee that initiated the project. "We needed to raise awareness among the residents about the importance of local shops, especially in a small rural community."
To promote community spirit and incentivize local spending, Langenegg launched its own community currency, the Langenegger Talente, in 2009. More than 15 years later, the village shop and other local businesses are thriving and the currency is still going strong: Around €160,000 worth of local currency are issued per year, with each note circulating on average four times before being converted back to euros, thus keeping over €600,000 in the community each year.
The reason for this success? "It's all about attitude," says Gernot Jochum-Müller, an expert in complementary currencies who has helped set up and run the scheme. "Everyone understood that there are two sides to this project—a monetary and an educational one." Through his social business Allmenda he has helped launch multiple local and regional currencies over the years, and finds that awareness-raising is half the battle: "As we've seen, the commitment level can be extremely high if the goal is clear and understandable for people." In Langenegg, more than half of the village's residents work in surrounding towns, passing a handful of large supermarket chains on the way there and back—meaning the choice to instead support local businesses has to hinge on more than economic self-interest. Nußbaumer says that the currency has succeeded in its goal: "I think people are now much more aware that they should spend their money locally, because it's about more than just shopping."
While anyone can set up a local currency, the monetary system underpinning it needs to be well thought out to avoid unwittingly perpetuating existing inequalities, or simply failing to address the community's goals. "Not all complementary currencies are good. It depends on who designs them, and what they are designed for," says Barinaga.
In Langenegg, "the fees, the process, everything is adapted to the needs of the village," says Jochum-Müller. Around 20 percent of the village households are subscribed to the currency and receive a set monthly amount. Since 100 Talente cost €97, shopping with the currency means an automatic three percent discount, while changing them back to euros incurs a 10 percent fee. Crucially, the municipality gives all its funding and subsidies—whether it's for local farmers, household renovations or association events—in Langenegger Talente, so the money has to be spent locally. "Before, people would spend it in wholesale supermarkets," says Jochum-Müller. "That's like having a watering can with a hole in it."
Far from being a neutral system of exchange, a currency is a tool to achieve certain goals, says Jochum-Müller: "We need different tools for different goals, but our monetary system makes us think that we only have this one tool. And there are many goals we can't achieve with it."
Inequality and unsustainability are baked into our monetary system, which is based on debt and interest with practically all the money (97 percent in the U.K.) being created by private banks when issuing loans, explains Barinaga.
Well-designed community currencies eliminate two main sources of financial inequality: money's perceived inherent value and the interest rates, which both incentivize people to hoard their money, taking it out of circulation. "We think of money as a thing that we either have or don't," says Barinaga. "But actually, it's an infrastructure." Like the pipes that bring water to your house, money is the conduit that gives you access to goods and services. Accordingly, the value of money is created in the transaction—the more money is circulated, the more value it creates.
Beyond their immediate effect on a community, local currencies are also proof that the mechanism behind our monetary system isn't an immutable fact of life.
"It's a forgotten impact of citizen-driven currencies that people start asking the right questions," says Barinaga. "It can put us at a much better footing to have a democratic debate about how our monetary system could work to serve us and the planet, not to serve the financial interests of the private banking sector."
Living Paradigms is a series about what we can learn from the customs and cultural practices of others when it comes to solving problems. It is sponsored by Wonderstruck.
This story was produced by Reasons to be Cheerful and reviewed and distributed by Stacker.