"Complementary" Currency Helps Local Communities

currency
With complementary currency, federal dollars are not the only acceptable form of payment in a community.

Over the past 10 years, more than 5,300 Chicago school children from impoverished neighborhoods have tutored their peers and earned free computers for their homes. Five parks in Calgary, Canada, have become pesticide free, and a formerly homeless 70-year-old woman in Madison, Wisconsin, received free crochet lessons in exchange for cooking and cleaning for neighbors. All three of these community success stories can be attributed to a single trend: “complementary currency” programs.

Complementary currency, a form of exchange that aims to ”complement” standard monetary currencies, comes in many forms. So-called local currency systems, like the one that contributed to the pesticide ban in Calgary’s parks , rely on a homegrown form of paper money that is accepted only in a small geographical area and is not backed by the national government . The intention of local currency, explains Gerald Wheatley, a founder of the Calgary Dollars project, is to promote a sense of community and to stimulate the local economy by ensuring that cash stays in the region . One of the greatest benefits of the program, he says, is that it provides “one more resource, one more social networking support for progressive projects .”

Time-based currency, in contrast, is designed to strengthen communities by valuing “the universal characteristics of human beings,” based on the understanding that every individual has something to offer, according to Edgar Cahn, founder and CEO of Timebanks USA. Under this system, every member ’s time is valued equally, allowing for what is effectively a more structured form of barter. When a person performs an hour of service for a neighbor, he or she earns an hour of service from anyone else in the system. In this way, the elderly Madison woman was able to spend an hour cooking for one member of the local time bank and was repaid with an hour-long crochet lesson from a local 15-year-old boy. Alternatively, the Chicago school children were required to give 100 hours each of tutoring services to earn a refurbished computer. These types of programs convert community members who are conventionally recipients of support into active participants in tackling local problems.

Both types of systems have their advantages. Steve Burke, president of the board of directors of the local currency initiative Ithaca Hours in New York state, says such systems are easy to operate because people already understand money and its uses. Small local businesses can also gain a competitive advantage over other retailers, since most large chain stores won’t accept local currency . Ithaca “hours” (dollars) have been in use for 15 years, and with about 1,000 residents circulating them, the system continues to grow. Mr. Wheatley of Calgary Dollars notes that the physical presence of local paper money in people’s wallets reminds them to “think locally.” By providing grants and interest-free loans, his program has been able to promote campaigns such as the one to eliminate pesticide use in parks, bringing more than just economic benefits to the community. Both men attest to the sense of community people feel when exchanging the currency with other members.

Time banks are perhaps even better at incorporating people into local social networks— especially community members who may otherwise be excluded, such as low- income households, retired people, and the disabled, according to a report from the UK-based New Economics Foundation. The systems have seen success in as many as 24 countries, in communities ranging from hospitals and schools to elderly housing facilities . In Washington, D.C., a youth court based on the time- banking system, which uses tactics like placing previous offenders on jury duty, reduced recidivism by 50 percent, notes Timebanks USA’s Cahn. “We think that most efforts to address social problems fail because they equate the person with the problem and they don’t enlist the capacity of every human being to help somebody else,” he says.


This story was produced by Eye on Earth, a joint project of the Worldwatch Institute and the blue moon fund. View the complete archive of Eye on Earth stories, or contact Staff Writer Alana Herro at aherro [AT] worldwatch [DOT] org with your questions, comments, and story ideas.