Complementary currency

A complementary currency is used to supplement to 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.

Terminology

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'.

History

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.

Bernard Lietaer

Bernard Lietaer (born in 1942 in Lauwe, Belgium) is a civil engineer, economist, author and professor. He studies monetary systems and promotes the idea that communities can benefit from creating their own local or complementary currency, which circulate parallel with national currencies.

Bernard Lietaer, the author of The Future of Money: Beyond Greed and Scarcity and New Money for a New World, has been active in the realm of money systems for close to 40 years in a wide variety of functions. With the publication of his post-graduate thesis at MIT in 1971 (which included a description of "floating exchanges") and the Nixon Shock of that same year which eradicated the Bretton Woods system by unhinging the US dollar value from its gold standard and inaugurated the new era of universal floating exchanges (previous to that time the only "floating exchanges" involved some exotic currencies in Latin America), the fledgling management consultant suddenly found himself to be at the center of the financial world's attention. The techniques that he had developed for those marginal Latin American currencies were overnight the only systematic research which could be used to deal with all of the major currencies of the world. A major US bank negotiated exclusive rights to his approach which required that he begin another career. While at the Central Bank in Belgium (National Bank of Belgium) he implemented the convergence mechanism (ECU) to the single European currency system. During that period, he also served as President of Belgium’s Electronic Payment System. His consultant experience in monetary aspects on four continents ranges from multinational corporations to developing countries.