A complementary currency is a

currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...

medium of exchange In economics, a medium of exchange is any item that is widely acceptable in exchange for goods and services. In modern economies, the most commonly used medium of exchange is currency. Most forms of money are categorised as mediums of exchange, i ...

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 Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment in court for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything ...

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 Local may refer to: Geography and transportation * Local (train), a train serving local traffic demand * Local, Missouri, a community in the United States Arts, entertainment, and media * ''Local'' (comics), a limited series comic book by Bria ...

community A community is a social unit (a group of people) with a shared socially-significant characteristic, such as place, set of norms, culture, religion, values, customs, or identity. Communities may share a sense of place situated in a given g ...

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 A private currency is a currency issued by a private entity, be it an individual, a commercial business, a nonprofit or decentralization, decentralized common enterprise. It is often contrasted with fiat currency issued by Forms of government, gove ...

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.

Barter In trade, barter (derived from ''bareter'') is a system of exchange (economics), exchange in which participants in a financial transaction, transaction directly exchange good (economics), goods or service (economics), services for other goods ...

s are another type of alternative currency. These are actually exchange systems, which trade only items, without the use of any currency whatsoever. Finally,

LETS A local exchange trading system (also local employment and trading system or local energy transfer system; abbreviated LETS) is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community infor ...

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 The Community Exchange System (CES) is an internet-based global trading network which allows participants to buy and sell goods and services without using a Fiat money, national currency. It may be described as a type of local exchange trading s ...

, WIR and Friendly Favors, Tibex in the

Lazio Lazio ( , ; ) or Latium ( , ; from Latium, the original Latin name, ) is one of the 20 Regions of Italy, administrative regions of Italy. Situated in the Central Italy, central peninsular section of the country, it has 5,714,882 inhabitants an ...

region in Italy or the proposed global currency terra. A

community currency A community is a social unit (a group of people) with a shared socially-significant characteristic, such as place, set of norms, culture, religion, values, customs, or identity. Communities may share a sense of place situated in a given g ...

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: * Commercial credit circuit *

(CES) – global exchange network *

Digital gold currency Digital gold currency (or DGC) is a form of electronic money (or digital currency) based on mass units of gold. It is a kind of representative money, like a gold certificate (United States), US paper gold certificate at the time (from 1873 to 193 ...

* 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 Sardinia ( ; ; ) is the Mediterranean islands#By area, second-largest island in the Mediterranean Sea, after Sicily, and one of the Regions of Italy, twenty regions of Italy. It is located west of the Italian Peninsula, north of Tunisia an ...

The Sardex Factor, Financial Times
/ref> *

Ven Venezuela, officially the Bolivarian Republic of Venezuela, is a country on the northern coast of South America, consisting of a continental landmass and many islands and islets in the Caribbean Sea. It comprises an area of , and its popul ...

– a digital currency used in Hub Culture, a private social network * WIR Bank – founded in 1934, oriented towards small and mid-sized corporations

References

External links

*
Community Currency Magazine
' *
International Journal of Community Currency Research
'

Social Trade Organisation

Secure eXchange Protocols

Trade Point: Internal currency of Barter platform

Minutes Bank
{{DEFAULTSORT:Complementary Currency Local currencies Monetary reform Cryptocurrencies