From the US Constitution Article I. Sec. 10:
No State shall [...] coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; [...]
I think that means that the States can't create their own currency. If I remember my history correctly, one of the problems after independence was that all of the States issued their own currencies, making the central government's treasury and interstate trade difficult.
Thank you for that important quote of the constitution. I had to dig into old newspapers to find out where I read about local provincial currency, and I found it took place in England, not in the U.S.
So from that news leads back to the wikipedia article:
http://en.wikipedia.org/wiki/Totnes_poundTotnes Pound is issued by Totnes, a town in Devon, England.
Quote from wikipedia:
A Totnes Pound is equal to one pound sterling and is backed by sterling held in a bank account.
In December 2008 a Totnes Pound was sold on eBay for £13.02.[citation needed]
As at September 2008, about 70 businesses in Totnes were accepting the Totnes Pound.
I wonder why British government not act agressive and ban it outright. Even if it is pegged to pound sterling it may shift through time.
Further digging into wikipedia reveals there are other community currencies:
This page lists 6 community currencies in the U.K.
http://en.wikipedia.org/wiki/Category:Community_currencies_of_the_United_KingdomI further wonder if they are required to follow governmental fiscal policies.