The latest peer-reviewed publication in the Wisdom Letters series, produced by the School of Resource Wisdom at University of Jyväskylä (JYU.Wisdom), examines local currencies as part of the transition to a more sustainable society. It was written by Dr Teppo Eskelinen and Dr Marcus Petz.
Local currencies are payment systems used in specific regions. They strengthen the local economy by increasing the circulation of money and creating incentives for local procurement. These monetary systems can also serve various other purposes, ranging from supporting voluntary initiatives to financing green energy projects.
Although choices related to monetary systems can significantly impact the economy, they have received little attention in the context of the sustainability transition. Local currencies are concrete initiatives to strengthen local sustainability.
The use of local currency is encouraged when it is more profitable to spend it than to exchange it
In the case of local currencies, one can sometimes talk about parallel currencies. However, these do not refer to barter trade or its different forms. Local currency also does not refer to cryptocurrencies or various customer loyalty programmes.
From a consumer’s point of view, local currency functions in the same way as ordinary money as long as it is used to purchase goods or services from local companies within the system. Companies are encouraged to purchase products locally when it is more profitable to spend local currency than to exchange it. When functioning properly, the system thus strengthens local production.
Local currencies provide an alternative to centralised, growth-oriented production systems. The aim of the sustainability transition is to replace environmentally harmful and inequality-increasing practices with more sustainable solutions.
The Chiemgauer system, for example, has been in use in Bavaria since 2003. Starting as a modest school project, it has become one of the world’s best-known local currencies. Chiemgauer money, which is also available electronically, is accepted by around 375 companies.
A special feature of this system is that a local project chosen by the currency exchanger receives three percent of the exchange value (from euros to Chiemgauers). According to the plan, the Chiemgauer currency loses eight per cent of its value per year. This encourages people to use the local currency instead of hoarding it.
The authors emphasise that the support and active involvement of the authorities are necessary for creating functional local currency systems. The publication presents recommendations for policymakers and bodies interested in establishing complementary currencies. The authors give the following recommendations for potential founders of currency systems:
• Create clear and transparent admission criteria.
• Make a credible analysis of the special conditions, structure, and starting situation of the local economy.
• Agree on the method of currency issuance and the principles for selecting issuers.
The full publication is available in Finnish: Eskelinen, Teppo & Marcus Petz (2026). Paikallisrahat osana ekologisesti ja sosiaalisesti kestävän talouden mahdollistamista: suosituksia perustamiseen ja käyttöönottoon. Wisdom Letters 2026(1). https://doi.org/10.17011/wl/14
Wisdom Letters is an interdisciplinary, peer-reviewed, open-access journal focusing on sustainability transitions and planetary well-being, produced by the University of Jyväskylä School of Resource Wisdom (JYU.Wisdom).
Further information:
- Marcus Petz, PhD, marcus.kit.petz@student.jyu.fi; University of Jyväskylä, Tel. +358 (0)40 821 1919
- Teppo Eskelinen, PhD, teppo.eskelinen@uef.fi; Senior Lecturer, University of Eastern Finland, Tel. +358 (0)50 428 9317
