The first known use of Holocaust money was in the Lodz ghetto in Poland in 1940. Over the next five years, the Nazis introduced currencies in concentration camps and other ghettos in Germany and occupied Poland, Czechoslovakia and the Netherlands. Each camp or ghetto had its own currency — with unique denominations and designs — to be used only within its gates.
Natale said Holocaust money was part of a complex economic system that served to strip European Jewry of its resources and further the Nazis’ genocidal aims. Jews could redeem the money under Nazi regulations or through black markets for food, clothes and other goods.
In concentration camps, Nazi officials and some factory owners paid Jewish slave laborers “bonuses” in the currencies to make them work harder. Thousands of Jews were worked to death during the Holocaust.
In ghettos, currencies served to compensate Jews when Nazi officials confiscated their valuables and cash. While ghetto residents relied on food rations, there was never enough to eat, and cash could be the difference between life and death. Coins in the Lodz ghetto
were made of a flammable alloy and sometimes used as fuel.
The ghetto currencies also served to mark the Jews who carried them, putting them at risk if they left the ghettos, where they were legally required to stay.
– Concentration Camp Currency Unearthed by Researchers, by Penny Schwartz, Forward.com