What are Regional Currencies? (Part 2)

(Continued from Part 1)

That is not to say the residents of the respective regions took in the new currencies with open arms. As it is with human nature, the residents were weary at first, reluctant to participate but after 8 years, as in the case of the Chiemgauer, things took off. The Chiemgauer in its fledgling year had a dismal turnover of €75,000, but by 2011, its turnover increased to €6 200 000. Now over 600 businesses in the region accept the currency and according to reports, the residents are happy with it. After all, 1 Chiemgauer is exchangeable for 1 euro, so I guess the residents don't lose out at all.With the Berkshare, it is another success story. Last year, over 400 businesses accepted the Berkshare. In just 30 months from its launch, about 2.2 Berkshares were issued.

Berkshares
(Source: Wikipedia)

Chiemgauer
(Source: http://www.telegraph.co.uk/news/worldnews/1540939/Rival-to-euro-as-Germans-cash-in-on-currency.html)

Regional currencies are introduced for several reasons - although the Chiemgauer did start out as a school project, it has brought benefits to the region's people and economy. Similarly, the Berkshares have gain immense attention from non-users as the financial cirsis hit the Western world in 2008. It seems that with the Berkshare, the Berkshire economy was able to stay relatively intact and stable, although the Berkshare is still backed by the US dollar, the local currency still succeeds in retaining wealth within the community. 

However, there are downsides as well, the BerkShare, being backed by the US dollar, is still vulnerable to volatility in the US economy in general. The Chiemgauer does present a catch, if the note is not used within 3 months, its value depreciates and renewing the expired requires the holder to pay a sort of penalty.

I think having regional currencies is a good idea if the people in the community are willing to participate and support it fully. Otherwise, it would be hassle trying to pay for some goods at a local shop. The regional currency, of course, has many limitations, such as not being accepted outside of the specific region. I wonder, if any regional currency ever got to a stage of being so influential that it could match even a quarter, or even one tenth, of the country's currency turnover or profit, would it be a significant threat to the country's currency?

(Concluded)

Cheers
zhusun

Further reading:
http://en.wikipedia.org/wiki/Local_currency
http://en.wikipedia.org/wiki/Chiemgauer
http://en.wikipedia.org/wiki/BerkShares