Complementary currency

Complementary currency (CC) is a voucher meant to be used as a complement to another currency, typically 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 Community Exchange System, WIR and Friendly Favors, or the proposed global currency terra.^[2]

Complementary currency describes currencies that exists as a supplement to our conventional (national) money. “A complementary currency (…) is an agreement to use something else than legal tender (i.e. national money) as a medium of exchange, with the purpose to link unmet needs with otherwise unused resources” (Lietaer & Hallsmith 2006: 2).

Complementary currencies advocates thus don't claim a full separation of money and state.

Purposes

Complementary currencies are often designed intentionally to address specific issues or problems.^[3] 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.^[4] 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.^[5]

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.

Community currency

A community currency is sometimes called a complementary currency.^[6]

Types of complementary currencies

Complementary currencies describe a wide group of exchange systems, 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.

One Wörgl Schilling note with demurrage stamps

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. Another type of complementary monetary systems is the barter, an exchange of specific goods or services is performed without the use of any currency.

In 1982, the most widespread auxiliary currency system – the Local Exchange Trading Systems was created. It regulates the exchange of goods and services between the members of the cooperative. Examples for an investment system of complementary currency are the Automatic Social Financial Network (ASFN) and the international crowdsourcing and crowd-funding community Evolution RA^[7] whose members use their own complementary virtual currency “Сyber-gold”. The introductory fee paid by the new association members is subsequently directed toward investments in a variety of commercial projects.

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 industrialization, 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.

Example of a fully funded complementary currency

The Toronto dollar 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.

Example of a fully digital complementary currency

Brk (Brnensky kredit) is used in Czech republic in City Brno where operates the Rozletse LETS community using the Cyclos LETS Banking software as service.

Major activists

Some major complementary currency activists are Belgian ex-banker Bernard Lietaer, British economist Hazel Henderson, Dutch STRO-director Henk van Arkel that developed Cyclos, Qoin initiators Edgar Kampers and Rob van Hilten, Margrit Kennedy from Monneta, Local Exchange and TRading inventor Michael Linton, Time Banking inventor Edgar S. Cahn, and many others. 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.^[8] Lietaer has also spoken at an International Reciprocal Trade Association (IRTA) conference about barter.^[9]