Complementary currency

A complementary currency is used to supplement a national currency. It is an agreement to use a medium of exchange that is not usually legal tender. The purpose may be to protect or stimulate a particular economy. Another purpose may be to orientate the economy towards social, environmental or political aims.

The terms 'complementary currency', 'community currency' and 'local currency' have not been used consistently. According to Jérôme Blanc of Laboratoire d'Économie de la Firme et des Institutions, complementary currencies aim to protect, stimulate or orientate the economy. Community currencies aim to protect and strengthen a community and local currencies aim to protect and strengthen a territory.

Sometimes the term 'complementary community currency' is used. Local currency, describing a complementary currency which is limited to a single locality, is sometimes used interchangeably with 'complementary currency'.

Advocates in the 1960s, especially in Canada, promoted complementary currencies to supplement national currencies. Certain leaders of this movement were careful to use the term 'complementary'. They used it to emphasize the importance of working in cooperation with governments and the tax system, businesses and other established organisations.

Since the 1980s there has been a steady increase in the number of complementary currencies. In 1993 there was roughly 500, by 2003 there was over 4000.

Complementary currencies are often designed intentionally to address specific issues, for example to increase financial stability. Most complementary currencies have multiple purposes and/or 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. The 2006 Annual Report of the Worldwide Database of Complementary Currency Systems presented a survey of 150 complementary currency systems in which 94 respondents said that "all reasons" were selected, among cooperation, micro/small/medium enterprise development, activating the local market, reducing the need for national currency, and community development.

Aims may include:

Complementary currencies describe a wide group of exchange systems, currencies or scrips designed to be used in combination with standard currencies or other complementary currencies. They can be valued and exchanged in relationship to national currencies but also function as media of exchange on their own. Complementary currencies lie outside the nationally defined legal realm of legal tender and are not used as such. Rate of exchange, scope of circulation and use in combination with other currencies differs greatly between complementary currency systems, as is the case with national currency systems.

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