Arthur Smid

Complementary Currency: Create a Diverse Monetary Ecosystem and a Resilient Economy

Citizens Invested in Their Community

The dollar needs no introduction, but complementary currencies have different forms and uses. Though diverse, they all exist to facilitate exchange within a community. In times of high unemployment when spending money is scarce, a complementary currency can match the unmet needs with the unused resources of a local government. Empty seats on the bus are an unused resource. Invasive ivy growing in the city park presents a need for maintenance. If a group of citizens work with the supervision of one paid park staff (or trained volunteer), the invasive ivy could be removed. What if the local government could support underfunded programs by paying people in a complementary currency that could be used to purchase a monthly bus pass, or perhaps to pay fees at the library for late books?

The local government, by issuing a complementary currency, could promote use of government services, programs, or activities. The example of removing ivy in exchange for a bus pass is just to illustrate how a complementary currency could be used. The best use would be identified by the local government and its citizens. City, county and regional governments each have unique areas of responsibility and programs to meet local needs. Given the complexity of inter-agency coordination, it makes sense to start simple. Once a need is identified that might be assisted through use of a complementary currency, the system could be designed to succeed in fulfilling those unmet needs with unused resources.

By creating a successful local currency on a modest scale, the program could be expanded later to address other needs, and potentially to collaborate with other agencies. Maybe it would be possible to coordinate with place-based nonprofits, so citizens could earn credits in the local currency by working with nonprofits, or even local businesses. Since the currency functions as an agreement, the local government and participating organizations could decide the terms of service.

In Oregon, local government could find support from people involved with Portland Time Bank and RiverHOURS. Another model to learn from is BerkShares, an alternative currency created to promote local business in the Berkshire region of western Massachusetts. BerkShares enter circulation in the local economy when citizens exchange their federal dollars for the complementary currency at a participating bank. To illustrate, using BerkShares as an example, with $95 dollars a person can receive $100 in BerkShares. The currency can be spent at participating shops listed in a directory and advertised by a “BerkShares Accepted Here” sign on shop windows. The federal dollars remain on deposit at the participating exchange bank to redeem the BerkShares at a five percent discount. $100 in BerkShares would be exchanged for $95 federal dollars. This incentivizes citizens to both use BerkShares and to keep them in circulation. The intention is to strengthen the local economy by encouraging citizens to use services and shops run and owned by people living in the area.

Since BerkShares are backed by federal money, some monetary designers feel they aren’t a true complementary currency. Regardless of the designation, the model has enjoyed success and supporters. In the U.K. there’s a similar currency called The Bristol Pound. The press coverage garnered to successful efforts brings public awareness to the potential for a more diverse monetary ecosystem. Time banks are another form of complementary currency. The unit of exchange is one hour of a person’s time. A website lists members, their requests and offers of services, and the time dollars exchanged by members. As a membership-based organization, the time bank can cover some operating costs with an annual fee. Time banks can also be tailored to specific needs where demand is greatest, such as Fureai Kippu to provide care for senior citizens in Japan.

The documentary, Money & Life: A Story About Money That Will Change Your Life, provides inspiration to learn more about monetary design. Researching diverse monetary ecosystems can generate ideas for solving local economic problems. The potential for complementary currency to ease the pain of unemployment, support local enterprise, and subsidize underfunded programs is a creative and practical use of the real wealth of cities: good citizens.

Complementary Currency: Challenge and Opportunity for Local Government

By employing a complementary currency, local government can increase regional economic stability. Our single currency system creates high-yield efficiencies but the trade-off is an increased vulnerability to economic shocks, reduced lending to small business, scarcity of money for new hires and greater insecurity among the population. A diversity of economic exchanges can enhance regional resilience. Through professional and well-managed implementation of a complementary currency, the regional government can provide opportunities for its citizens and avoid circumstances that lead to turmoil.

Complementary currencies tend to arise in times of economic depression, such as the Wörgl in Austria and the Wära in Germany during the Great Depression. These successful responses by local governments were suppressed by central banks. The continued economic hardship led to further instability and the rise of authoritarian systems of political and economic control.

History illuminates the need to ensure key players are stakeholders in the process of developing sustainable currency systems. By involving local banking and financial service leaders in early talks, the banking community is made welcome and potentially available to help. A 2002 effort in Rotterdam to encourage sustainable consumption and production through an incentive card had the support of the European Union as well as one of the largest banks of the Netherlands. Though the NU card is considered a success, the Rotterdam pilot project was not self-supporting and it proved difficult to secure continued funding.

A currency needs to be funded to cover infrastructure and administration costs. For a complementary currency system to succeed over time it also requires democratic governance, transparency, and accountability. The currency needs to be professionally managed to support a public good and be a win-win for all participants. To guarantee democratic implementation, the government would maintain transparency of the currency’s accounts and mechanisms for all participants.

With all the extra effort required to introduce a complementary currency into the local economy, many people may begin to wonder, why bother? During difficult times, the economic needs of some members of the community can only be answered with forms of relief. By designing economic resilience into the local economy, a local government will be better able to meet the needs of citizens in challenging economic circumstances. It’s possible to feel that a single currency can meet every need, but even during the best of times, abundance is not often experienced by disadvantaged populations. A complementary currency can be a useful tool to provide relief. The currency could be designed and implemented to serve the the underserved, and available to be expanded during an economic crisis to serve wider needs.

Complementary Currencies: How to Begin

Local currency design has a long history and each effort responds to the needs of its time and place. At the very least, the potential for a local currency could be shared with the community in a kind of “what if” proposal. If by way of introducing the challenges of creating a complementary currency, people become more aware of the benefits and opportunities, they may choose to support a pilot project. The pilot could be funded through an online form where supporters can donate money toward the project. Complete funding for research, design, infrastructure, and administration of a complementary currency could be reached through a municipal bond, financial transaction tax, foundation grant, and donations.

Money functions as a store of value, a unit of account, and a medium of exchange. But even more basically, money is an agreement. If people don’t agree the currency has value, they won’t accept it. A complementary currency is an agreement amongst a community to use something as a medium of exchange. U.S. federal law prevents using the word “dollar” when referring to a complementary currency. Local government in creating a complementary currency could decide upon a memorable and meaningful name like CityShares, BridgeShare, Community Credits (CC), or civics.

Complementary currency is often issued on paper. To prevent counterfeiting, the currency could be digital. A website could list all the needs to be met, the resources to be earned, and the transactions made by members. Mobile banking software ( exists to facilitate SMS payments. And if a phone-based currency would limit availability to people who need it most, a paper option could be issued to people without phones and signed by the issuer like a check to prevent counterfeiting.

By allowing citizens who earn credits to sell or trade them with a willing buyer, the city could create an opportunity for people who need to earn money but cannot find a job in the current market. What if citizens could earn credits by working with one paid staff or trained volunteer to guide the work: removing graffiti from buildings, cleaning trash from high-use areas along the river, registering voters, or removing invasive plants? A complementary currency could be a lifeline for homeless people who have limited access to dollars for their daily needs.

Creating a resilient local economy is an investment in people. Imagine if underfunded school programs could afford additional teachers through payment in a complementary currency: the benefits would begin to multiply. The Saber, a currency proposed to encourage learning in Brazil, was designed to be distributed by the state so children could purchase mentorship from older students. The currency moves from lower grades to higher grades and finally to universities where it can be redeemed in exchange for higher education. The currency is there collected and returned to the issuer. The Saber would replace traditional grants and reward active participation in education. A complementary currency matches unmet needs with unused resources. Our wisdom and creativity as a community are a fantastic resource. Through generating awareness about complementary currency, communities can discover creative ways to meet the needs of local government and its citizens.

For more information:

Rethinking Money: How New Currencies Turn Scarcity Into Prosperity by Bernard Lietaer and Jacqui Dunnebr

International Journal of Community Currency Research

“Local Currencies Grow During Economic Recession” | Worldwatch Institute

Onion River Exchange: Your Central Vermont Time Bank

Onion River Exchange Time Bank Video

Prof. Dr. Margrit Kennedy

European Commission: “Demonstration Project PlusPunten Rotterdam (NU card)”

A Proposal for a Brazilian Education Complementary Currency, Bernard Lietaer (PDF)

New Money for a New World, by Bernard Lietaer and Stephen Belgin | Available free online

Complementary Currency Software

Complementary Currency Resource Center