Valuable Local Currency (VLC) creates demand for a locally-circulating money and then provides the means for meeting that demand.
By targetting the circulation of the local currency to various sectors of the local economy, this program supports the increased diversification of the local economy, provides opportunities to produce and market new value -added products through increased local specialization, fosters cooperation and socio-economic solidarity, and develops new methods for sharing knowledge and skills.
The Valuable Local Currency System is a step toward achieving the goal of innovating and improving community currency systems, and the Valuable Local Currency System evolved out of research and understanding of a number of problems with typical local currency systems. The first problem is stagnation of the local currency system because there is no reason to circulate the local currency, or demand for the local currency.
The local currency becomes stuck in various “wells” in the economy, such as a popular local business and doesn’t circulate . The currency becomes stuck because typical local currency systems don’t encourage circulation of the currency, for example by charging for the use of the currency or by providing another motivation to circulate the currency such as if it were lent out and had to be repaid. The lack of circulation means an insufficient amount of funds being generated to cover administration expenses and provide for training. The quality of management can decline and the system can become unsustainable. By not being able to develop new elements of the local economy, the range of goods and services being offered for local currency is reduced, and exacerbates the above-mentioned problems.
By encouraging local production through micro-credit loans or local value-added production, the local currency economy can provide a broader range of goods and services to the local economy, while encouraging healthy circulation of money in the economy and generating a sufficient amount of income for the system's administration.