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Sub-national currencies struggle to survive | The Economist

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.

From Sub-national currencies struggle to survive | The Economist

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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.

From Sub-national currencies struggle to survive | The Economist

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Finally, having to deal with two parallel currencies imposes transaction costs—and those wanting to back local businesses can easily use the national currency.

From Sub-national currencies struggle to survive | The Economist

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