With the collapse of economic strategies that promote the export of raw materials to finance the purchase of imports, many communities are finding themselves in economic distress. Neither these communities nor their residents have the capacity to meet their needs because the flow of funds has been reduced.To rectify this problem, some communities try to attract a new firm to provide a new export. However, there are others that question the rationale for this approach and look instead for alternatives. One such alternative is a development strategy called Community Economic Development (CED). In order for CED to be successful money is required so that development initiatives can be funded and local aggregate demand can be increased. One source of this money can be local currencies.This thesis describes and analyzes the history of local currencies. Based on this background the potential of local currencies is discussed so as to highlight the types that are most effective for CED. Since local currencies demand attention as an economic development tool suggestions for their implementation are outlined and policy recommendations are put forth.