When a full spectrum of currencies are available, people will complete more transactions, enabling more people to meet their needs and create trading relationships.

Backed currencies such as e-gold can be issued (or barter exchanges completed) by whoever owns a commodity or service. These systems thus do not require a central authority to guarantee the currency and manage its supply.
Money created as mutual credit (like LETS, ROCS, and Time Dollars), as well as fiat money that does not bear interest (such as Ithaca HOURS) is in sufficient supply, thus encouraging cooperation among participants. Demurrage currencies also discourage hoarding and encourage longer-term planning and sustainable investment.

Benefits

How Issued

Unit of Account

How complementary currency is issued:

Complementary currencies may be issued as

"fiat" currency (as in Ithaca HOURS)--issued, managed and guaranteed by a central authority;
mutual credit (as in LETS, ROCS, and Time Dollars); or
commodity-backed money or scrip that may be redeemed for a particular product or service.

How complementary currency is measured.

ROCS, Time Dollars and Ithaca HOURS use the hour of service as unit of account.
LETS measures Green Dollars in the corresponding national currency unit.
Barter and backed currencies use goods and services themselves to measure exchanges.

Complementary currency exchange rates:

In most Time Dollars systems, exchange rates are fixed such that each person's hour of service has the same value. For that reason, the Time Dollars model are most prevalent in communities where it is generally accepted that everyone's service time is equivalent in value.
In most other complementary currencies (and in national currency), including mutual credit systems like LETS and ROCS, and in Ithaca HOURS, the amount of money exchanged in any transaction is negotiable. These systems are thus more popular in more diverse communities where products or services requiring a greater variety of skills, experience, training, equipment, or risk are exchanged.

Structural incentives in complementary currency:

I prefer to think of community support through community money as contribution TO the body social/political/economic rather than taxation, which feels more like extraction FROM. Stuff we throw in, comes around; that which is sucked out is most likely gone.

--Michael Linton, originator of LETSystems

Complementary currencies, because they do not bear interest (which discounts future earnings in relation to present cash),

promote longer-term planning by encouraging participants to invest in productive assets rather than hoarding currency; and
encourage trade and cooperation, because the money is in sufficient supply.

Those complementary currencies backed by an external reference (a commodity or service) rather than the fiat of a central authority are less susceptible to inflation.

Complementary currency models in action today:

Many of the most prevalent complementary currency models have a presence on the web:

The Ithaca HOURS home page
LETS home page;
What is the Time Dollar Network?
The e-gold home page

Also take a look at a graph showing the increase in complementary currencies since 1980.

Related Resources

Also on the Transaction Net site:
- Pages devoted to specific currency models (LETS, Time Dollars, backed currency, national currency, Ithaca HOURS, and ROCS money); as well as a general description of how money works.
- reviews of all available Payment Methods
- a glossary of money-related terms and concepts
- a directory of publications relating to complementary currency systems and how the Internet can facilitate them.
Roy Davies's extensive and thorough money site includes an excellent page on Local and Interest-Free Currencies, Social Credit, and Informal Credit Systems
We also highly recommend New Money for Healthy Communities by Thomas Greco
Bernard Lietaer's The Future of Money: Creating New Wealth, Work, and a Wiser World was published in January 2001 (and is available in German from http://www.futuremoney.de).
Alternative Money Systems
The Virtual simplicity and alternative money page
The International Journal of Community Currency Research has been publishing since 1997. There's also a discussion list archived online. Some IJCCR articles include:
- Barbara Brandt's review of Olaf Egeberg's Non-Money: That 'Other Money' You Didn't Know You Had
- Gill Seyfang's "Examining Local Currency Systems: A Social Audit Approach"
Vote on the New Money Systems and Financial Innovations presented by the Global Ideas Bank
Browse through the back issues of In Context (a journal of sustainable culture) to find some excellent articles, including:
- Economics in the Solar Age: an interview with Hazel Henderson by Alan AtKisson;
- Grassroots Economics by Paul Glover;
- Robert Gilman's Design for a Sustainable Economy; and
- The Next Reformation: an interview with Paul Hawken by Sarah van Gelder.
Basic Arguments for Using Local Currency
Materialien zu Silvio Gesell
Regional currencies insulate against speculation by Shann Turnbull
A very thorough history and analysis of Islamic Banking
Digital Cash and Monetary Freedom by Jon W. Matonis
"Beyond Greed and Scarcity: An Interview with Bernard Lietaer" by Sarah van Gelder, Editor of Yes! appeared in the Money: Print Your Own! issue.
"What You Can Do to Build a New Economy"
Funny Money by David Boyle
The Book of Visions invites you to evaluate the need for regional currencies.
The Virtual Library on Microcredit
"The Difference Between Money and Wealth: Creating Community Currencies" by Carol Brouillet
The Asset-Based Community Development Institute
The Social Credit School of Studies
Learning About Community Currencies and a related list of community currency links
Libertarians prefer to call them "Free Currencies" or "Competitive Currencies"
Community Economics.
Monetary Reform Magazine
The E. F. Schumacher Society's local currency page
Lewis D. Solomon's Local Currencies: a Legal and Policy Analysis was published in the Kansas Journal of Law and Public Policy, 5:2.
Debt Money
Susan Meeker-Lowry's "The Potential of Local Currency" in Z magazine
General Agreement on a New Economy presents articles on sustainable economics
Local Monetary Reform - Do It Yourself!
Ken Stokes proposed a Kauaian currency in his October 20, 1999 column, which also presented images of the 5-Coconut note.

The Transaction Net site is an independent, open forum where anyone and everyone can explore new economic media, so if you know of another site that deserves attention, please let us know. You're also invited to register and join us over in The Money Conference.

The Money Conference

Join us in The Money Conference, where we're gathering to compare insights on all kinds of money systems--old, new, high- and low-tech, real or theoretical--and to synthesize from our shared experience wiser and more efficient models of exchange media. Sign up for Motet conferencing, then come on in and introduce yourself.