TUCKED away in a corner of Brixton, in south London, a rainbow-coloured ATM dispenses cash, looking for all the world like any other. But the notes it spews out are not pounds sterling. They are Brixton pounds (B£). Not to be mistaken for silly Monopoly money, the Brixton pound can actually be spent, legally: the currency, which has a fixed one-for-one exchange rate with sterling, is accepted at over 150 local shops and businesses. It can even be used to pay local taxes.

Launched in 2009, this is one of many such initiatives. Local currencies have been adopted in other towns and cities in Britain, such as Bristol, Exeter and Totnes. Elsewhere, examples include the eusko, used in the French Basques; BerkShares, used in western Massachusetts; and the Ithaca Hour, in Ithaca, New York. Barcelona plans an experiment in 2017.

Such schemes aim to boost spending at local retailers and suppliers, by encouraging the recirculation of money within a community. Because the currency is worthless outside its defined geographic area, holders spend it in the neighbourhood, thus creating a “local multiplier effect”. Backers of the schemes also claim environmental benefits: stronger local businesses cut transport distances and carbon emissions.

But local currencies have a poor record. Of over 80 launched in America since 1991, only a handful survive. Elsewhere, the Guardiagrele simec in Italy, the Toronto dollar, the Stroud pound and others are languishing or are already defunct. Even the Ithaca Hour, the most hyped “success”, has seen its circulation fall precipitously from two decades ago, says its founder, Paul Glover.

Local currencies face three hurdles. First, they are relatively illiquid, being accepted only at willing local businesses. They are, in effect, a form of self-imposed economic sanction, narrowing the range of choice for consumers and businesses. Second, local-currency schemes suffer from a trust deficit: they are not backed by the central bank, so holders do not want to risk having too much. Finally, having to deal with two parallel currencies imposes transaction costs—and those wanting to back local businesses can easily use the national currency.

All of which helps explain why local-currency circulation in most of these places is very low. Just B£100,000 ($123,000) circulates, for example, in an area of 300,000 people. That is too little to have much of an economic impact one way or another. The odd-looking notes, however, do make good souvenirs.