Making Cents Creating a local currency can help entrepreneurs drive sales.

At Tom's Toys in Great Barrington, Massachusetts, some customers don't pay with cash or credit. Instead, they use a newly printed local currency that's good only in the Southern Berkshires. The money, known as BerkShares, is purchased for 90 cents on the dollar but is redeemable at full price at participating stores. The goal is to encourage shoppers to buy from local merchants. "I think of it as a goodwill form of advertising," says Tom's Toys owner Tom Levin.

BerkShares was launched in 2006 by a coalition of local business owners and community activists looking for a way to strengthen community ties and encourage local purchasing. Today, more than 280 merchants participate in the program, and more than $1.5 million in BerkShares is expected to be in circulation by year-end. One secret to the currency's success is that, unlike many other local-currency schemes, it can be converted back into U.S. dollars. Levin says that's crucial for his participation since he can take in $1,000 a month in BerkShares but has few vendors that will accept them.