There's quite a lot of economics behind this for local currencies e.g. The Brixton Pound [0]. The number of times that currency gets re-used (keeps flowing in the system) is very important, that is the person you pay, uses that to pay for something else locally rather than just sticking it in their bank or sending it overseas.

Susan Steed, one of the co-founders of the Brixton Pound explains a bit more in this TEDx video [1]

[0]: http://brixtonpound.org/

[1]: https://youtu.be/l_F0xBABI7c?t=7m6s