Local currencies can help to reduce carbon footprint.
Firstly, local currencies, which can also be known as community currencies or complementary currencies, are a form of money that can only be used in a certain region or place, where it is accepted as the means of payment. You may think, what is the rationale for such community currency when we already have our own national currency? Well, the rationale is that this community currency will not be exchanged out of the intended region, unlike national currency, and thus, the circulation of this community currency will promote the trading of local goods that require less transportation, as well as benefit the local economy.
Community currencies are increasingly practised throughout the world. Examples include Time banking, LETS (Local Exchange Trading Scheme) and HOUR currencies in states in the US and European Union.
Time Banking and how it works.
The journal article shows that while community currencies do promote the increased trading of local products over imported ones, thereby saving carbon emissions that arise from transporting over long distances, their benefit to the environment is limited.
Nonetheless, I think they still have a role to play in promoting a sustainable economy. Even though Singapore is a small country, I think there is the possibility of implementing an economic system similar to such community currencies, in terms of encouraging the consumption of local agricultural produce. This would reduce the 'food miles' from transporting large amounts of imported food, and help to support the livelihoods of local farmers as well.
Dittmer, K. (2013). Local currencies for purposive degrowth? A quality check of some proposals for changing money-as-usual. Journal of Cleaner Production, 54, 3-13. doi:10.1016/j.jclepro.2013.03.044