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A complementary currency is a currency or medium of exchange that is not necessarily a national currency, but that is thought of as supplementing or complementing national currencies. Complementary currencies are usually not legal tender and their use is based on agreement between the parties exchanging the currency. According to Jérôme Blanc of Laboratoire d'Économie de la Firme et des Institutions, complementary currencies aim to protect, stimulate or orientate the economy. They may also be used to advance particular social, environmental, or political goals.

When speaking about complementary currencies, a number of overlapping and often interchangeable terms are in use: local or community currencies are complementary currencies used within a locality or other form of community (such as business-based or online communities); regional currencies are similar to local currencies, but are used within a larger geographical region; and sectoral currencies are complementary currencies used within a single economic sector, such as education or health care. Many private currencies are complementary currencies issued by private businesses or organizations. Other terms include alternative currency, auxiliary currency, and microcurrency. Mutual credit is a form of alternative currency, and thus any form of lending that does not go through the banking system can be considered a form of alternative currency. Barters are another type of alternative currency. These are actually exchange systems, which trade only items, without the use of any currency whatsoever. Finally, LETS is a special form of barter that trades points for items. One point stands for one worker-hour of work, and is thus a time-based currency.

Purposes

Current complementary currencies have often been designed intentionally to address specific issues, for example to increase financial stability. Most complementary currencies have multiple purposes and/or are intended to address multiple issues. They can be useful for communities that do not have access to financial capital, and 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.

Aims may include:

• resocialisation and emancipation
• lifeboat currencies
• to increase financial stability
• to reduce carbon emissions, by encouraging localisation of trade and relationships
• to encouraging use of under-used resources
• to recognise the informal economy
• promote local businesses
• maintaining purchasing power, value preservation

Advantages

Alternative currencies increase in activity if the local economy slows down, and decrease in activity if the local economy goes up. They are most successful if the currency circulates within the users, in cycles or loops, as shown in an analysis of the use of Sardex by 1,477 entities in Sardinia in 2013 and 2014.

Disadvantages

According to professor Nikolaus Läufer's theory, the use of local currencies such as Freigeld can only increase economic activity temporarily. Lengthy use of a local currency will ultimately result in a decline in economic activity and lead to a destabilization of the economy. This is due to the increased circulation velocity of the money as the amount in circulation decreases (as currencies as Freigeld reduce in value rapidly).

Tax

There are some complementary currencies that are regional or global, such as the Community Exchange System, WIR and Friendly Favors, Tibex in the Lazio region in Italy or the proposed global currency terra.

A community currency is a type of complementary currency that has the explicit aim to support and build more equal, connected and sustainable societies. A community currency is designed to be used by a specific group.

List of complementary currencies

Other non-regional complementary currencies include:

• American Open Currency Standard (AOCS)
• Commercial credit circuit
• Community Exchange System (CES) – global exchange network
• Digital gold currency
• Fourth Corner Exchange
• Local Exchange Trading Systems (LETS) – an example of mutual credit, is a type of local currency used in a number of small communities worldwide.
• Rábaközi Tallér
• Sardex, alternative currency used in Sardinia
• Ven – a digital currency used in Hub Culture, a private social network
• WIR Bank – founded in 1934, oriented towards small and mid-sized corporations
• Minutes Bank – founded in 2023, focused on individuals as unique currency generators

See also

• ANCAP
• Barter
• Bancor
• Bearer instrument
• Bernard Lietaer
• Cardano (blockchain platform)
• Collaborative finance
• Commodity money
• Community currency
• Community wealth building
• Company scrip
• Conder token
• Credit money
• Cryptocurrency
• Currency substitution
• Cyclos
• Digital currencies
• Digital gold currency
• E.C. Riegel – proposed the Valun Private Enterprise Money System
• Flex dollar
• Freigeld
• LETS
• List of Canadian community currencies
• List of community currencies in the United States
• List of cryptocurrencies
• Local currency
• Local exchange trading system
• Margrit Kennedy
• Paul Glover (activist)
• Patacon
• Private bank
• Sectoral currency
• Silvio Gesell
• Tim Jenkin
• Time Banking
• Tumin
• Urstromtaler
• Ven (currency)
• WIR Bank
• Wörgl experiment
• World currency

References

1. Costanza, Robert et al., "Complementary Currencies as a Method to Improve Local Sustainable Economic Welfare", University of Vermont, Draft, 12 December 2003.
2. ^ Lietaer, Bernard; Hallsmith, Gwendolyn (2006). "Community Currency Guide" (PDF). Global Community Initiatives. Retrieved 18 June 2015.
3. Blanc, Jérôme (2011). "Classifying "CCs": Community, complementary and local currencies' types and generations" (PDF). International Journal of Community Currency Research. 15: 4–10.
4. Fare, Marie; Ahmed, Pepita Ould (2014). "The complementary currency systems: a tricky issue for economists". hal.archives-ouvertes.fr. Retrieved 18 June 2015.
5. ^ Lietaer, Bernard; Ulanowicz, Robert; Goerner, Sally (2009). "Options for Managing a Systemic Bank Crisis". S.A.P.I.EN.S. 2 (1).
6. "Faludi, Jeremy "Complementary Currency: For Bootstrapping, But Not For Everything", Worldchanging, 4 October 2005". Archived from the original on 13 March 2009. Retrieved 2 March 2009.
7. DeMeulenaere, S. (2007). "2006 Annual Report of the Worldwide Database of Complementary Currency Systems" (PDF). International Journal of Community Currency Research. 11: 23–35. doi:10.15133/j.ijccr.2007.003. ISSN 1325-9547.
8. Stodder, James (January 2005). "Implications for Macroeconomic Stability" (PDF). Archived from the original (PDF) on 30 August 2017. Retrieved 3 April 2014.
9. Iosifidis, George; Charette, Yanick; Airoldi, Edoardo M.; Littera, Giuseppe; Tassiulas, Leandros; Christakis, Nicholas A. (November 2018). "Cyclic motifs in the Sardex monetary network". Nature Human Behaviour. 2 (11): 822–829. doi:10.1038/s41562-018-0450-0. ISSN 2397-3374. PMID 31558815. S2CID 256713022.
10. Läufer, Nikolaus (31 December 2006). "Natural Economic Order Theories or Freiwirtschaftslehre (Silvio Gesell)" (in German). University of Konstanz. Archived from the original on 20 November 2012. Retrieved 3 April 2014.
11. B. Rietaer, "Global Complementally Currency: Making Money Sustainable", Environmental Research Quarterly, Vol. 125, pp. 53–59, 2002.
12. "People Powered Money: designing, developing and delivering community currencies" (PDF). Community Currencies in Action. Retrieved 17 June 2015.
13. "Making Money for Business: Currencies, Profit, and Long-Term Thinking". thesolutionsjournal.com. Archived from the original on 8 November 2011. Retrieved 20 March 2014.
14. "Fizetőeszköz lesz a Rábaközi Tallér". kisalfold.hu. Archived from the original on 29 August 2010. Retrieved 28 August 2010.
15. "Sardex homepage". sardex.net. Retrieved 20 March 2014.
16. The Sardex Factor, Financial Times
17. "The dollar alternatives - Ven". cnn.com. Cable News Network. Retrieved 3 April 2014.

Further reading

• Glover, Paul. Hometown Money: how to enrich your community with local currency. Greenplanners, 2013.
• Lietaer, Bernard. The Future of Money. Random House, 2001.
• Raddon, M. Community and money: men and women making change. Montreal: Black Rose Books, 2003.
• Suhr, Dieter (1990). The Neutral Money Network (NeuMoNe): A Critical Analysis of Traditional Money and the Financial Innovation "Neutral Money"

External links

This article's use of external links may not follow Misplaced Pages's policies or guidelines. Please improve this article by removing excessive or inappropriate external links, and converting useful links where appropriate into footnote references. (November 2019) (Learn how and when to remove this message)

• Community Currency Magazine
• International Journal of Community Currency Research
• Online Database of Complementary Currencies Worldwide Archived 2013-01-16 at the Wayback Machine
• Social Trade Organisation
• Secure eXchange Protocols Archived 2020-08-13 at the Wayback Machine
• Trade Point: Internal currency of Barter platform
• Minutes Bank

• Local currencies
• Monetary reform
• Alternative currencies
• Cryptocurrencies