Complementary Currency
From Open Risk Manual
Definition
A Complementary Currency (also Alternative Currency or Local or Community Currency) is a currency (form of Money that is different from the monetary units offered by the formal monetary system (supported by a modern nation-state).
Legal Status
Complementary currencies are in general not Legal Tender and their use is based on agreement between the parties exchanging the currency.
Objectives
Complementary currencies typically aim to protect, stimulate or otherwise support a particular segment of an economy defined in geographic or social term. They are used to advance social, environmental, or political goals that are deemed not (readily) achievable within the official monetary system and tools, such as:
- resocialisation and emancipation of population segments
- recognition of informal economies
- promotion of local businesses / local economic activity
- improved financial stability / economic resilience
- reduced carbon emissions and environmental impact through localisation of trade and relationships
- encourage the (re)use of under-utilized resources
Forms
- Barter systems and local exchange trading systems
- Time-based currencies
- Mutual credit and forms of lending that do not route through the state-backed banking system can be considered a form of alternative currency.
- Cryptocurrency
Issues and Challenges
- Co-existence with widely used currencies: Complementary currencies that cannot be spent outside the community have limited use and adoption
