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"Complementary" Currency Helps Local Communities
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Alana Herro writes for Eye on Earth (e²), a service of World Watch Magazine in partnership with the blue moon fund. e² provides a unique perspective on current events, newly released studies, and important global trends.

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 l ocal 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 . O ne 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, p resident of the b oard of d irectors 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 “h ours? (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.

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I'm commenting from Jordan in the Middle East. There has been an introductory discussion to introduce some form of complementary 'development' currency here in Jordan. In effect it takes the middle ground between a barter system and straightforward cash payments. The idea seems to be that local contractors and other service providers who implement aid-funded development projects will be paid a portion of their fee in the form of vouchers which will be accepted in the local community in return for services provided. Then such contractors will use the vouchers pay for food, catering, accommodation, secretarial services etc etc. And then the recipient will use the voucher to purchase more services. It is assumed that the vouchers will circulate in the local community and after they have made a number of transactions they will be redeemed.
Personally, I'm sceptical. I'm not quite sure why the poor should accept 'virtual' cash when there is a perfectly good currency called Jordanian Dinars which are accepted everywhere.
Mind you, I think it would be a great idea to remunerate grossly over-paid aid agency staff with such vouchers... and see how they like swapping services! But then what services could they have to offer of any use?

On a previous trawl through your archives, I did find a link to an informative website about voucher systems:
http://www.strohalm.net/en/strohalmis.html
If anyone else with a commitment to social justice has experience of such alternative currency that would be useful. And if anyone else would like to offer critical assessments of micro-credit (see previous post on trickle up) I am very interested too.


Posted by: winkie williamson on 1 Nov 06

Your article touches on a way of doing business for so many small business owners and entrepreneurs in cities around the world. Since 1980 I have published a magazine on the subject, BarterNews. Far too few people make the connection that their services, (which they "sell" when employed by someone for a dollar bill) can also be traded directly or indirectly to enhance their lifestyle and provide them with greater financial independence.

I offer 1,000 free articles and a FREE weekly newsletter, The Tuesday Report, on our website. We also have a special section titled, "Community Barter" that provides some excellent FREE advice.

Sincerely,
Bob Meyer, Publisher
Http://www.barternews.com


Posted by: Bob Meyer on 2 Nov 06

Thanks for this good piece.

By way of background, I founded a company in 2002 to provide design and implementation of what we called Targeted Currencies. You can learn a lot about our work in the Omidyar Network forums -- http://www.omidyar.net/group/currencies/news/ (pick through the brown tabs for lots of info my partners have posted).

The important shift in understanding targeted currencies is to realize that different systems (time vs. barter vs. reputation et al) are appropriate for different scenarios. Our approach and technology are about being open and flexible, rather than bringing just one hammer to the job and seeing every problem as a nail.

Philosophically, I believe that a growing consciousness around how we use money, how money uses us (credit, debt, global finance, speculation) is the most important fulcrum / tipping point in greater worldchanging agenda.

Local currencies are becoming more and more common, and progressive towns in the US, UK, Japan and Europe, as well as many projects in developing nations are all proving great success. the Furea Kippu project in Japan provides elegant options for the aging population that state-run health services have yet to match.

I highly recommend reading "The Future of Money" by Bernard Lietaer. You'll find it on Amazon UK: http://www.amazon.co.uk/Future-Money-Creating-Wealth-World/dp/0712699910/sr=8-3/qid=1162493031/ref=sr_1_3/026-2935658-0202042?ie=UTF8&s=books

Finally, I fell hugely honored to have met and collaborated with Edgar Cahn (mentioned above), who is one of the most important innovators and unsung heroes of social justice in our world today. Be sure to read his works and go meet him in person somewhere. No one is more inspiring.

Thanks, and sorry for long post -- this is a passionate issue for me.


Posted by: Greg Berry on 2 Nov 06

Thanks for the illuminating article. Time Banking will be part of the solution for the questions and problems that face our nation around Peak Oil, sustainibility and rebuilding communities.

Best wishes,
Lesley Jones


Posted by: Lesley Jones on 2 Nov 06

(A previous comment was killed. Ah, well.)

The next flu pandemic will bring currency shortages with need to give and get.

BirdShot is a kind of "emergency local currency" being explored at fluwikie.com and birdshot.cc


Posted by: lugon on 3 Nov 06

I've been doing some work recently on currencies like this for use in a refugee context.

The basic idea is that the outfit running the camp prints "money" - tickets, tokens, we'll call them "Camp Scrip" (CS).

Think brightly colored, UN-logo tokens, with the name of the camp printed on them and a few emblems of local / national pride.

The key is that they have no inherent value. Because refugees have nothing, they can't afford to transact trades in the local currencies in many cases. You can't exchange a dollar for a day's labor if you don't have a dollar.

So what the Camp Scrip allows is for refugees to start trading with each other using a "currency" which is without inherent value.

Suppose the Camp Scrip begins to encourage people to take up their trades again - hairdressing is a good example of a trade which might be continued in a camp. Suppose the hairdresser becomes Camp Scrip rich and finances a work crew to decorate a tent for a religious festival. Has something here been created which would not have been there before?

Go further. Suppose a local trade network emerges based on Camp Scrip, and locals come to the camp to buy services (like hairdressing) cheaply. Soon, you wind up with exchange between Camp Scrip (for which you can get your hair done) and local "hard" currency.

That exchange just added real value, where none existed before, to every Camp Scrip dollar in circulation.

A low cost way of getting people back into the economy? I don't know. Maybe.


Posted by: Vinay Gupta on 3 Nov 06



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