Complementary currency

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Complementary currency (CC) is a currency which is meant to be used as a complement to a national currency.[1] 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 WIR or Friendly Favors, or the proposed Terra Currency.[2]

Contents

[edit] Types of complementary currencies

Complementary currencies describe a wide group of currencies or scrips 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, 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.

[edit] 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.[3] 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.[4]

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

[edit] Complementary Currencies

It is important to understand that there is evidence that, 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.

[edit] Example of a fully funded CC

For example, The Toronto dollar system, is a system which is fully funded by Canadian dollars. In other words, the system is backed by Canadian dollars. Participating merchants are free to exchange the Toronto dollars for Canadian dollars. While the system will work better when more and more of the CC is kept in circulation, no one needs to feel trapped by the system.

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. For details, check out: http://www.torontodollar.com

[edit] Major CC Activists

Some major CC activists are Professor Bernard Lietaer [1] and British enconomist, Hazel Henderson, [2]. 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.[5] Lietaer has also spoken at an IRTA conference about barter.[6]

[edit] See also

[edit] External links

[edit] Complementary, local exchange software and systems design

[edit] Examples of complementary currencies currently circulating

[edit] References

  1. ^ Robert Costanza et al., "Complementary Currencies as a Method to Improve Local Sustainable Economic Welfare", University of Vermont, Draft, Dec. 12th, 2003.
  2. ^ B. Rietaer, "Global Complementally Currency: Making Money Sustainable", Environmental Research Quarterly, Vol. 125, pp. 53-59, 2002.
  3. ^ Jeremy Faludi, "Complementary Currency: For Bootstrapping, But Not For Everything", Worldchanging, Oct. 4th, 2005.
  4. ^ S. DeMeulenaere, "2006 Annual Report of the Worldwide Database of Complementary Currency Systems", International Journal of Community Currency Research, Vol. 11, pp. 23-35, 2007.
  5. ^ "Bernard Lietaer Urges the Growth of New Currency", Bank Technology News, Jul. 1st, 2004.
  6. ^ "Barter and Cashless Trading Summit to Promote Collaboration of International Reciprocal Trade: IRTAs 26th Annual Conference Is The First of Its Kind", PRWEB, Jul. 22nd, 2005.
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