Well, this is neither a what-to-do-when-there's-more-month-than-money article nor an attempt to list the top 10 destinations in the world where money is not in charge. Accordingly, this is not the idea behind a complementary currency system either, that is to replace 'established' national currencies. On the contrary, as its name suggests, a complementary currency can be thought of as supplementing or complementing national currencies. Thank you captain obvious!
Pretty much most complementary currencies have multiple purposes and 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. While complementary currencies have been around for ages, this post, using data from complementarycurrency.org focuses on a more 'contemporary' version of such exchange systems.
As we can see in the chart above everything (re)started in the 1980s, 'Victoria Local Exchange Trading System' in Canada being the first created in 1982, followed by 'LETS Utrecht e.o., het Sterrenstelsel' in the Netherlands in 1985 and 'Maleny LETS' in Australia in 1987.
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 used within a larger geographical region; and sectoral currencies are complementary currencies used within a single economic sector, such as education or health care. The table below shows the most common types of complementary currencies in the 10 countries of my dataset with the most systems registered.
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. Local exchange trading systems (LETS), the most popular type in my dataset, are locally initiated, democratically organised, not-for-profit community enterprises that provide a community information service and records transactions of members exchanging goods and services by using locally created currency.
Here's the most frequent types of organization of a complementary currency system.
So, what do people exchange? I broke down the dataset into 10 categories (e.g., time, commodities, precious metals). Following 'National Currency Equivalents', 'Time' is the second most popular unit of value in my dataset, and the most popular in Belgium and the US. As far as the states are conserned, this should come with no surprize thanks to Ithaca HOURS, the oldest and largest time-based local currency system in the country, which has been inspiring other similar systems since its creation in 1991.
Shall we talk about sustainability? It should be clear by now that complementary currencies do not seek to replace traditional ones (okay, some of them do). Conversely, most systems in the world need funding to keep going and the table below shows how they manage to do it. Good work Spain and Belgium.
Other interesting observations:
As you might have noticed, all 13 systems in Venezuela, created between 2007 and 2010, are local exchange systems trading several units of value, which are defined by their members, always.
In the UK 'Fiat Currency' is the second most popular system. Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material that the money is made of.
Germany uses the 'REGIO' as its main complementary currency. According to an article from 2007 the regio "is a reaction to the growing difficulties small farmers, butchers, bakers and organic stores have to compete with discount retailers. It is also an attempt to do something for their towns and villages. The participants employ a new method of payment to keep money and added value in the region."
Finally, while the 3 observations above suggest a rather face-to-face transaction between the members of a system, the graph below shows how electronic transactions fascilitate the operations of complementary currency systems worldwide.
