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schwund"In a surprisingly growing number of regions in Germany private "regional currencies" are issued as a cash substitute for the euro. Currently, these regional currencies are conceived almost exclusively as Schwundgeld (depreciative currency), which loses value on a predetermined timescale. This loss of value is intended to encourage the money owners to spend their money quickly in order to boost local demand. This paper shows that the issuance of unofficial parallel currencies is not a fundamentally new phenomenon neither in Germany nor in other European countries. The theoretical assumptions of the Schwundgeld concept (Silvio Gesell (1862 – 1930)) are highly flawed and suboptimal from a welfare-theoretical perspective. However, the current economic welfare losses resulting from the issuance of Schwundgeld are negligibly small."

Determinants of the demand for regional money: "[T]he reasons underlying the demand for regional currency are likely to consist more in its curiosity value in an age when the monetary system is becoming increasingly internationalised and in the regional currency holders’ belief ((listen to Russell Roberts (Cafe Hayek) talking on Minnesota Public Radio about whether it is a good idea to "buy local.") that they are promoting the regional economy by using local money. Furthermore, these currencies provide those that hold them with the opportunity to demonstrate their loyalty to the region and thereby take a stand against globalisation ("Geld der Anti-Globalisierer" [Currency of the globalisation opponents]). According to research undertaken by Süddeutsche Zeitung, it is, at least, always the same people ("immer die gleichen") who pay in regional currencies."
AleksJ meinte am 27. Mar, 21:03:
Once you allow the price to depend on the buyer (not just on the seller), there is no longer much need for regional currencies. For example, if the buyer is from outside the region, the price he has to pay for a widget is higher. This is how sellers can protect themselves when they don't trust the money supplier's discipline. 
Mahalanobis antwortete am 28. Mar, 03:41:
thought the idea was that a local is forced to pay a higher price for a local good in case he doesn't spend his money immediately. That way -- according to this "consumption is good and saving/investment is bad"-theory-- he should indirectly help himself. 
AleksJ antwortete am 28. Mar, 17:16:
Nah, the way you're interpreting it, nobody would care about regional currencies. The point is that you sell at a lower price to a guy who you know is more likely to a) who will sell you his stuff for a lower price too b) spend the money locally benefiting your community c) who will continue buying from you in the future.

What regional currencies do is that they increase the price of foreign goods. The upside is that the quality of goods is higher (because the producer is known, and you can go after them if they sell you bad stuff), and the downside is small market size (limiting development) and market imperfection with plenty of opportunities for arbitrage (import/export/exchange). I can easily imagine a group of high quality producers decide that they will preferentially trade with each other, each of them paying for lower risk.

Also, how different is a regional currency from sticking with schilling and having inflation? 
Mahalanobis antwortete am 29. Mar, 02:34:
are assuming that there is some price discrimination going on (those having Chiemgauers pay less). Never heard of that before. AFAIK you can pay in local shops with euro or (vel) the community currency. The point is that only local shops -- but not supermarket chains and the like -- can participate in this payment system ("Don't buy at stores that don't accept the local currency"). 
AleksJ antwortete am 29. Mar, 18:28:
I'm describing my experience living in a small country with its own (ordinary) currency. Greeks, for example, upon the adoption of Euro, complain about increased prices for certain products that are now traded more easily. Price discrimination is ubiquitous in real life and isn't restricted to regional currencies: local businessmen would have two cars, a good one for selling and a bad one for buyingf. Thanks for the Chiemgauer link - there seem to be many ideas around. 
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