4 Types of Complementary Currencies – REGENERATIVE.com

4 Types of Complementary Currencies

‘Complementary currency’ is a term that is gradually becoming more widely known. Indeed, In July 2014, California passed a law that made complimentary currencies legal forms of exchange, whereas previously they has existed in something of a legal grey area. So a lot more people are asking just what are complementary currencies.

Complementary currencies are, in essence, an agreement between parties to use something other than the national currency as a medium of exchange. Often they are restricted to a certain locality – a town or county, for instance – but may also have regional or even global reach. These forms of exchange are designed to allow people’s needs to be met where otherwise resources to meet those needs would go unused or would be exported out of the area.

Many people, particularly those with vested interests in maintaining the status quo, decry complementary currencies as somehow undermining the dollar. But the key part of the phrase is ‘complementary’. These forms of exchange are rarely designed to replace dollars entirely; they run alongside the national currency rather than in opposition to it.

These forms of exchange become important for several reasons. Firstly, they are generally local, community-based projects that help to make local economies more robust and foster a sense of togetherness. When people see the bankers on Wall Street whose cavalier trading activities caused the 2008 global financial crisis go unpunished and indeed continue trading as they always have done, they can feel very detached from and disenchanted with the national and international economic systems that have dominated modern societies up till now. And given that wealth inequality has actually increased since the GFC, with many millions of people worse off in real terms than before the crash, a lot of individuals are questioning just who benefits from the way things are currently run. Complementary currencies take some of the power over economic activity back from distant centralized organizations concerned only with profit an puts it in the hands of people for whom it makes a significant difference in their quality of life and the life of their community; they are providing means for communities to meet their needs without relying on the vagaries of capitalist consumption. They also often bring forms of exchange back to a human level, with the service or product provider having a direct relationship with the purchaser, and by promoting localism in consumption, they have the added benefit of reducing carbon emissions in the transportation of goods a long way for sale.

Local Currency
One of the most practical forms of complementary currency is the creation of a secondary currency for use within a small, prescribed area. Businesses in a local community sign up to accept the new currency in exchange for goods and services, and consumers exchange national dollars for denominations of the local currency. This form of complementary currency encourages money to remain in the region and supports small, local businesses, as well as fostering a closer supplier-consumer relationship. Berkshares in the Berkshire region of Massachusetts are an example of this kind of currency, as are Brixton Pounds used in the area in south London, UK of the same name, while the Czech city of Brno has its own local currency that is entirely digital, rather than comprising paper vouchers or ‘dollars’.

Seed Money
Linked to local currencies is the notion of seed money. In this system, when local currency is bought, a percentage of the transaction – anywhere from 2 per cent to 10 per cent – is subtracted and donated to community causes. This provides the seed money with which local initiatives and not-for-profit schemes – perhaps day-care centers or urban gardens – need to be implemented and run. It allows people to donate or invest in their community without using national currency. Seedstock in Vancouver is a prime example of a seed money scheme.

Time-Based Currency
Another form of complementary currency uses the notion of manpower as the unit of exchange. An individual performs a function for someone else, and ‘banks’ the time the function takes. They can then redeem the time from someone else in the cooperative that has signed up to the currency. The general unit of the currency is typically an hour and in the USA is sometimes referred to as a time dollar. Communities that subscribe to time based currencies will often set up a Time Bank where members can log and exchange their accrued hours. Time Banks are currently active in more than 30 countries across the world, with more than 300 separate banks in the USA alone. Time based currencies are funded on the idea that all human beings have valuable assets that can contribute to the health of a community, and that social networks and reciprocity are key elements of healthy, respectful societies.

Crowd Funding
Crowd funding has really taken off with the spread of social media and globalized communications. It is a way of types of complementary currenciesbypassing the traditional routes by which enterprises and products got off the ground – funding by banks or by the government. Crowd funding allows entrepreneurs to propose a project or product that they wish to create, and appeal for funds directly from the customers who would be the market for their product. Contributors can pledge small or large amounts of money to help the project become a reality, and in return will typically receive a perk or privileged version of the product – for instance, a signed copy of a book, or a share in the profits of the finished product. Such funding allows consumers to directly influence the products that become available, and it has often been used to develop ‘green’ technologies and products. A subsidiary of crowd funding is crowd sourcing, where people contribute time and skills to get a project off the ground. It is often used on projects that can be collaborated on via the Internet, such as website design, writing, illustration and translation, or when tedious tasks are divided among a number of people to make the task more manageable. Stuffing envelopes for political campaigns would be an example.


If governments are now allowing them it just proves that they don’t change anything.



I respectfully disagree. I think that by creating and implementing viable alternative currencies for the exchange of goods and services directly among people, a very important groundwork is laid for the future.

More information – Rethinking Money: How New Currencies Turn Scarcity into Prosperity

by Bernard Lietaer,
Jacqui Dunne

Beimg self employed I’ve bartered for yeArs…this takes it up a notch, and it is what will save our economy, and maybe our souls….

I love the idea. What’s even better are “competing” currencies. They are a great disincentive to government instigated inflation.

The problem with our economy has nothing to do with what currency we use. It is a problem of what our culture values and fails to value.


I use http://www.NumeroSet.Net as an alternative to accounting for my transactions with money.

Inge Leonora-den Ouden

I live in the Netherlands. Here laws are a little easier. About 20 years ago many ‘complementary currency’ groups started here. I started one in the town where I live. The first years it went very well. We exchanged services for our local currency (called ‘Nix’). It was time-based. But after some years it faded away. Now this group does not exist here anymore. I know in other places, mostly in the larger cities, these groups florish. Most of them are part of the (inter)national LETS organisation (Local Exchange Trade Systems, with a currency based on a Euro’s worth).

I still like the exchange trade. It’s also possible without any ‘currency’. I traded some things using Facebook. Directly: I have this (with photo), and I ask …. or … (some different things I can use) in exchange. Or someone asked my help, and I said: OK, I’ll do it, if you give me … (a product he makes).

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