The South London suburb of Brixton has become the first city council in the UK to launch its own currency, in a bid to keep businesses afloat during the recession.

With denominations of one, five, ten and twenty pounds, the Brixton Pound was launched amid much fanfare by the community volunteer group Transition Towns and with support from the London council of Lambeth.

More than 700 people and 60 local businesses have already signed up to the scheme.

Josh Ryan-Collins, a local currencies expert at the New Economics Foundation, who helped to develop the local Brixton pound, said that the currency would keep business in the area and embolden the community.

“The Brixton Pound is a community currency that will enable local people to vote with their wallets for a strong and diverse Brixton economy," he said.

“If you spend with a large chain retailer, over 80 per cent of your money leaves the area almost immediately. With the B£ [Brixton pound] we know that our money will stay working for Brixton.”

The notes, which will feature local historical figures such as Vincent Van Gogh, who lived in Brixton at the age of 20, cannot be paid into a bank or used outside the inner-south London area.

The Brixton Pound is the fourth local currency to be launched in the UK since the small town of Totnes in Devon introduced its own monetary system in 2007.