Complementary currency
Encyclopedia
Complementary currency (CC) is a currency
meant to be used as a complement to another currency, typically a national currency. Complementary currency is sometimes referred to as complementary community currency (CCC) or as community currency. The term local currency
, describing a complementary currency which is limited to a single locality, is sometimes used interchangeably with complementary currency. There are, however, some complementary currencies which are regional or global, such as the Community Exchange System
, WIR and Friendly Favors, or the proposed global currency terra.
s designed to be used in combination with standard currencies or other complementary currencies. They can be valued and exchanged in relationship to national currencies but also function as media of exchange
on their own. Complementary currencies lie outside the nationally defined legal realm of Legal tender
and are not used as such. Rate of exchange, scope of circulation and use in combination with other currencies differs greatly between complementary currency systems, as is the case with national currency systems.
Some complementary currencies incorporate value scales based on time or the backing of real resources (gold, oil, services, etc.). A time-based currency
is valued by the time required to perform a service in hours, notwithstanding the potential market value of the service.
Some complementary currencies take advantage of demurrage
fees, an intentional devaluation of the currency over time, like negative interest
. This stimulates market exchanges in the devaluating currency, propagates new participation in the currency system and forces the storage of wealth (hoarding) ability usually reserved for currency into more permanent and better value holding tools like (property, improvement, education, technology, health, equity securities, etc.) all of which are sheltered from the currency based demurrage fees.
Other experimental complementary currencies use high interest fees to promote heavy competition between participants, and the removal of wealth from long term wealth holding structures (natural/material wealth, property, etc.) to aid in the process of rapid industriaization, mass production, automation and competitive innovation.
Monetary speculation and gambling are usually outside the design parameters of complementary currencies. Complementary currencies are often intentionally restricted in their regional spread, time of validity or sector of use and may require a membership of participating individuals or points of acceptance.
In the current economic climate, some local money projects can also be promoted as
system is fully funded by (i.e. backed by) Canadian dollars. Participating merchants are free to exchange the Toronto dollars for Canadian dollars.
In addition to being supported by any number of social activists, including philosophers, clergy, artists, etc., it is fully supported by a growing number of political leaders, past and present, including, over the years, several mayors of Toronto.
and British economist Hazel Henderson. Lietaer has argued that the world's national currencies are inadequate for the world's business needs, citing how 87 countries have experienced major currency crashes over a 20 year period, and arguing for complementary currencies as a way to protect against these problems. Lietaer has also spoken at an International Reciprocal Trade Association
(IRTA) conference about barter
.
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
meant to be used as a complement to another currency, typically a national currency. Complementary currency is sometimes referred to as complementary community currency (CCC) or as community currency. The term local currency
Local currency
In economics, a local currency, in its common usage, is a currency not backed by a national government , and intended to trade only in a small area. As a tool of fiscal localism, local moneys can raise awareness of the state of the local economy, especially among those who may be unfamiliar or...
, describing a complementary currency which is limited to a single locality, is sometimes used interchangeably with complementary currency. There are, however, some complementary currencies which are regional or global, such as the Community Exchange System
Community Exchange System
The Community Exchange System is an Internet-based trading network which allows participants to buy and sell goods and services without using a national currency...
, WIR and Friendly Favors, or the proposed global currency terra.
Types of complementary currencies
Complementary currencies describe a wide group of exchange systems, currencies or scripScrip
Scrip is an American term for any substitute for currency which is not legal tender and is often a form of credit. Scrips were created as company payment of employees and also as a means of payment in times where regular money is unavailable, such as remote coal towns, military bases, ships on long...
s designed to be used in combination with standard currencies or other complementary currencies. They can be valued and exchanged in relationship to national currencies but also function as media of exchange
Medium of exchange
A medium of exchange is an intermediary used in trade to avoid the inconveniences of a pure barter system.By contrast, as William Stanley Jevons argued, in a barter system there must be a coincidence of wants before two people can trade – one must want exactly what the other has to offer, when and...
on their own. Complementary currencies lie outside the nationally defined legal realm of Legal tender
Legal tender
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency is a common form of legal tender in many countries....
and are not used as such. Rate of exchange, scope of circulation and use in combination with other currencies differs greatly between complementary currency systems, as is the case with national currency systems.
Some complementary currencies incorporate value scales based on time or the backing of real resources (gold, oil, services, etc.). A time-based currency
Time-based currency
In economics, a time-based currency is an alternative currency where the unit of exchange is the man-hour.Some time-based currencies value everyone’s contributions equally. One hour equals one service credit...
is valued by the time required to perform a service in hours, notwithstanding the potential market value of the service.
Some complementary currencies take advantage of demurrage
Demurrage (currency)
Demurrage is a cost associated with owning or holding currency over a given period of time. It is sometimes referred to as a carrying cost of money. For commodity money such as gold, demurrage is in practice nothing more than the cost of storing and securing the gold...
fees, an intentional devaluation of the currency over time, like negative interest
Interest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
. This stimulates market exchanges in the devaluating currency, propagates new participation in the currency system and forces the storage of wealth (hoarding) ability usually reserved for currency into more permanent and better value holding tools like (property, improvement, education, technology, health, equity securities, etc.) all of which are sheltered from the currency based demurrage fees.
Other experimental complementary currencies use high interest fees to promote heavy competition between participants, and the removal of wealth from long term wealth holding structures (natural/material wealth, property, etc.) to aid in the process of rapid industriaization, mass production, automation and competitive innovation.
Monetary speculation and gambling are usually outside the design parameters of complementary currencies. Complementary currencies are often intentionally restricted in their regional spread, time of validity or sector of use and may require a membership of participating individuals or points of acceptance.
Purposes
Complementary currencies are often designed intentionally to address specific issues or problems. Most complementary currencies have multiple purposes and/or are intended to address multiple issues. They are very useful for communities that do not have access to financial capital, and can be useful for adjusting peoples' spending behavior. The 2006 Annual Report of the Worldwide Database of Complementary Currency Systems presented a survey of 150 complementary currency systems in which 94 respondents said that "all reasons" were selected, among cooperation, micro/small/medium enterprise development, activating the local market, reducing the need for national currency, and community development.In the current economic climate, some local money projects can also be promoted as
- low carbon, by encouraging localisation of trade and relationships
- lifeboat currencies
- encouraging use of under-used resources
- recognising the informal economy
Complementary currencies
Beginning in the 1960s, the first advocates of complementary currencies, especially in Canada, did not think of CC as working contra to our national currencies. This is why certain leaders of this movement were careful to use the term 'complementary'. They used it to emphasize the importance of working in cooperation with governments and the tax system, businesses, unions, associations, charities, the banks and all forms of democratic capitalism—as partners in the above-ground economy.Example of a fully funded complementary currency
The Toronto dollarToronto dollar
The Toronto Dollar, founded in December 1998, is a paper local currency used in Toronto, Ontario and backed by the Canadian dollar.The currency is administered by Toronto Dollar Community Projects Inc., a not-for-profit community group, and is a project of St. Lawrence Works.The currency can be...
system is fully funded by (i.e. backed by) Canadian dollars. Participating merchants are free to exchange the Toronto dollars for Canadian dollars.
In addition to being supported by any number of social activists, including philosophers, clergy, artists, etc., it is fully supported by a growing number of political leaders, past and present, including, over the years, several mayors of Toronto.
Major activists
Some major complementary currency activists are Bernard LietaerBernard Lietaer
Bernard Lietaer is an economist, author and professor. He studies monetary systems and promotes the idea that communities can benefit from creating their own local or complementary currency, which circulate parallel with national currencies.Bernard Lietaer, the author of "The Future of Money:...
and British economist Hazel Henderson. Lietaer has argued that the world's national currencies are inadequate for the world's business needs, citing how 87 countries have experienced major currency crashes over a 20 year period, and arguing for complementary currencies as a way to protect against these problems. Lietaer has also spoken at an International Reciprocal Trade Association
International Reciprocal Trade Association
The International Reciprocal Trade Association is the global trade association for the modern trade and barter industry. IRTA promotes proper accountability rules, equitable standards, ethics and governmental relations, for the organized barter industry an its participating trade exchanges...
(IRTA) conference about barter
Barter
Barter is a method of exchange by which goods or services are directly exchanged for other goods or services without using a medium of exchange, such as money. It is usually bilateral, but may be multilateral, and usually exists parallel to monetary systems in most developed countries, though to a...
.
See also
- Calgary Dollar
- ChiemgauerChiemgauerChiemgauer is the name of a regional local currency started in 2003 in Prien am Chiemsee, Bavaria, Germany. It is named after the Chiemgau, a region around the Chiemsee. The Chiemgauer program is intended to promote local commerce...
- Digital gold currencyDigital gold currencyDigital gold currency is a form of electronic money based on ounces of gold. It is a kind of representative money, like a US paper gold certificate at the time that these were exchangeable for gold on demand. The typical unit of account for such currency is the gold gram or the troy ounce,...
- Ithaca HoursIthaca HoursThe Ithaca HOUR is a local currency used in Ithaca, New York and is the oldest and largest local currency system in the United States that is still operating. It has inspired other similar systems in Madison, Wisconsin; Corvallis, Oregon; and a proposed system in the Lehigh Valley, Pennsylvania...
- Lewes PoundLewes PoundThe Lewes Pound is a local currency in use in the town of Lewes, East Sussex. Inspired by the Totnes pound and BerkShare, the currency was introduced with the blessing of the town council in September 2008 by Transition Town Lewes - a community response to the challenges of climate change and peak...
- Margrit KennedyMargrit KennedyMargrit Kennedy is a German architect, professor, environmentalist, author and an advocate of complementary currencies and an interest and inflation-free economy....
- Sectoral currencySectoral currencyA sectoral currency is a form of complementary currency that is restricted to a specific sector. Examples of sectoral currency are the Saber, which is restricted to the educational sector and thus can only be used to buy education and the Hureai kippu, which is restricted to the health care...
- Silvio GesellSilvio GesellSilvio Gesell was a German merchant, theoretical economist, social activist, anarchist and founder of Freiwirtschaft.-Life:...
- Stroud poundStroud PoundThe Stroud Pound is a local currency in use in Stroud, Gloucestershire. Unveiled on 12 September 2009, the scheme is the third local currency scheme introduced in England in recent years after the Totnes Pound and the Lewes Pound.-History:...
- Time BankingTime BankingTime banking is a pattern of reciprocal service exchange that uses units of time as currency. It is an example of an alternative monetary system. A time bank, also known as a service exchange, is a community that practices time banking...
- WIR BankWIR BankThe WIR Bank, formerly the Swiss Economic Circle , or WIR, is an independent complementary currency system in Switzerland that serves small and medium-sized businesses...
- Ven (currency)Ven (currency)Ven is a global virtual currency used by members of a social network service Hub Culture to buy, share and trade knowledge, goods and services globally. It can be spent at any Hub Culture Pavilion or used for micropayments on the Internet at large. The value of Ven is determined on the financial...
- BitcoinBitcoinBitcoin is a decentralized, peer-to-peer network over which users make transactions that are tracked and verified through this network. The word Bitcoin also refers to the digital currency implemented as the currency medium for user transactions over this network...
- CyclosCyclosCyclos is open source online banking software for Microfinance institutions, local banks and complementary currency systems like LETS, Barter networks and Time banks.Cyclos has the following functionality:* Online banking tools;...