Every few years my community investigates setting up a local currency.

The arguments advanced in favor of the use of "local currency" tend to be:

- it keeps money circulating within our community, instead of having it leak out to the mainland/mainstream economy so rapidly.
- it encourages production and consumption of local goods
- it encourages use of our fallow local resources, especially labor
- it provides an easy method of implementing price discrimination to fleece tourists while charging locals a sane amount for goods
- it facilitates non-IRS/non state Department-of-Revenue transactions :-)

The folks on a nice island in Canada right next to us have been doing this for ~15 years or so:

http://www.saltspringdollars.com/

http://en.wikipedia.org/wiki/Local_currency