Unfortunately, local instance declarations threaten the coherence property of type classes and principle types. See for example, ``Functional pearl: implicit configurations—or, type classes reflect the values of types'', Sect 6.1, for a bit of discussion. So, this extension would require a very carefully thought out proposal. Manuel Johannes Waldmann:
in today's Haskell, all data and instance declarations are global, which sometimes leads to violations of the information hiding principle.
E. g. if there is a function sort :: Ord a => [a] -> [a], and I want to sort a list of items w.r.t. a specified ordering, then I would want to write
let instance Ord Item where ... xs :: [ Item ] ; xs = ... in sort xs
but I don't want to make the instance Ord Item global because I might need a different instance in another place, or there already is a global instance but I don't want it. So, the local instance should override an outer or global one. Shouldn't be too difficult, the compiler just has to insert the proper dictionary (the "most local" one that's visible at the call site).
With current all-global instances, a sort function of the given type is not very flexible, leading to supplementary functions (sortBy), see "Generalized functions" e. g. in http://www.haskell.org/ghc/docs/latest/html/libraries/base/Data-List.html#22 This is exactly a work-around for not being able to make local dictionaries, right?
Best regards,