Complementary Currency

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Complementary Currency is the name given to all those initiatives (mostly local ones) in which people use something else than official tender, either perfectly or partially, to clear transactions. This tool is especially effective when there are some unmet socioeconomic needs which could potentially be satisfied with avialable local resources.

Why Complemenetary Currencies?

There are two approaches to complementary currencies: the first one is theoretical and begins with identifying the unsustainability and unfairness of the conventional money system, suggesting the use of complementary currencies as sustainable money systems. On the other hand, the second one is rather pragmatic and those who cannot satisfy their socioeconomic needs create their own exchang system without understanding intellectually why such needs are not met with the currency system.

Theoretical approach

The typical approach of the first one is mentioned by Margrit Kennedy on her masterpiece Interest and Inflation-free Money:

The impossibility of eternal exponential growth

- "Anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." (Kenneth Boulding)

The current money system is based on the compound interest, i.e. the interest is added to the principal to accelerate furthermore the growth of credits. Therefore the debt grows not proportionally (1, 2, 3, 4, 5...) but exponentially (1, 2, 4, 8, 16...) as the time passes by. She points out that humans stop growing quantitively on reaching a certain stage (nobody over 20 gets taller) and that in the natural world only cancer goes on growing this way, therefore the exponential grow per se is not sustainable.

Compound interest is levied from every transaction

Every goods and service available at the market economy has its own price and consumers pay the compound interest either directly or indirectly every time they buy something, as producers of goods and services have to repay their debt with compound interest. According to her estimation, the amount of compound interest we pay amount to approximately one fourth of every price, i.e. one fourth of our income is levied to service such debts only to enrich the bankers et al.

Redistribution of wealth from the poor to the rich

And another innate problem of compound interest is that it redistributes money from borrowers (those without money) to lenders (those with money) and according to her estimation as many as 80% poorest pay more than receive while only 10% richest receive more than pay, showing that our current money system is unfair.

Based on this theory, Kennedy has been very active on the complementary currency movement as a way to build a sustainable and fair world, and some intellectuals have shared her vision.

Money as Debt from Banks

Paul Grignon raised another fundamental question on our money system in 2006 in his DVD "Money as Debt" in which he shows that most money in circulation comes into existence by way of credit creation, arguing that money is only supplied = lent by commercial banks when there is enough certainty that it will be repaid with the compound interest(no debt, no money), which leads every player in the real economy (invidivuals, businesses and even the public sector) to be more and more in debt, enriching only the financial sector.

Pragmatic approach

While Kennedy is right in her theory, it is also true that most initiatives of complementary currency have been born rather out of people's real needs than as the result of their money reform movement. The first LETS was born where people were suffering from the unemployment as the local coalmine had been closed, Fureai Kippu in Japan were practiced by those who found the lack of public elderly care service, Time Dollar was started by Edgar Cahn as a mutual help device to improve the poor's life standard etc.

About the term

The term "complementary Currency" was coined by Bernard Lietaer who found out that the conventional money promotes values such as competition, technology, hierarchy and central authority while other values such as cooperation, compassion, equality and mutual trust are neglected. He uses the word "complementary", based on his Taoist viewpoint that complementary currencies should correct the current world with excessive yang (male) and too little yin (female) values.


Contemporary initiatives started to emerge in 1980s while some historical antecedents can be found. For example, the labour certificate at Wörgl, Austria which circulated betweeen July 1932 and September 1933 achieved to revive the circulation of goods and services precisely when the world economy was afflicted with the Great Depression, although it was later forbidden by the Central Bank of Austria. Both WIRBank in the Switzerland and JAK Bank in Denmark (and later in Sweden) are surviving cases of this time, although the latter does not issue a complementary currency anymore, dealing merely with the legal tender of respective country.

Up to late 1990s most initiatives of complementary currencies were either LETS or Time Dollar or variants of either of them, while new sorts of initiatives have seen the day since then, such as Club de Trueque in Argentina, Chiemgauer in Germany, SOL in France and Berkshare in Massachussets, United States.

Significance for Solidarity Economy

Below are some merits that complementary currencies can bring to the Solidarity Economy:

  • They can strengthen the local economy and communities by stimulating the local production and consumption
  • As they are managed directly by their users, democratic management will be enhanced.
  • In case loans are given in complementary currency, it can achieve the same goals as solidarity finance does.

Initiatives in the World


South Africa



Korea, South



  • RES: Including RESPLUS



the Switzerland

United Kingdom

Latin America



El Salvador




North America


United States

External Links

de:Komplementärwährung es:Moneda Complementaria fr:Monnaie Complementaire ja:補完通貨 ko:보완통화 pt:Moeda Complementar