A growing number of communities now use scrip (aka a community currency or loyalty program) as a way to keep business activity local and thereby increase community resilience to economic shocks. Here's how it works. Customers buy scrip that can only be used with local businesses to buy goods and services. This is usually done in response to a community initiative. Businesses that accept scrip can either pay employees with the same (to the extent they accept it), provide it as change to customers (again, limited by acceptance), or exchange this scrip for hard currency (usually at a steep discount). Examples of scrip range from the Ithaca HOURS, Berkshares, to the Totnes Pound. While these attempts at scrip are better than nothing, in almost all cases these efforts have fared about as well as most "green" initiatives:

participation is meager (it is relegated to a lifestyle choice)



velocity is weak (low turnover),



it is vulnerable to economic contraction (when times are tough, participation among retailers falls off due to a scramble for a dwindling amount of hard global currency)



How to Accelerate Scrip

However, despite the spotty record so far, scrip is an extremely powerful means of accelerating local economic activity when nothing else seems possible (in economic extremis). Past experience with depression era scrip like Austria's Worgl indicate that the following will accelerate scrip adoption, velocity, and robustness:



Allow community members to use it to pay all or part of their tax liabilities to local governments. This instantly establishes a market for the currency. Also, pay local government employees a portion of their wages in scrip.



Deflate the value of the scrip (optimally, one percent per month) to promote immediate use rather than hoarding.



To the extent possible, connect scrip to local production rather than retail. Locally produced food (farmer's markets), energy (via local microgrids), products (personal fabs), and labor/services. Further, work with local banks to establish checking accounts for scrip and to enable conversions hard currencies (at a slight discount).



NOTE: Scrip should also be considered to be a part of a 21st century approach to economic development (likely superior to microcredit), (open source) counter-insurgency, and disaster/crisis recovery. For more background read the economist Irving Fisher on depression era scrip. The rambling utopian tract by Silvio Gesell is also interesting.