Money is not a given. Although we are often not aware of this, the money we use is basically a choice. In essence, money is an agreement (a consensus) to accept something for payment hat we are assured can be exchanged in the market for something we need.
That means that money is a social construct; a human invention. As a result, our conventional money has its own features and rules. These features and rules are simply the result of decisions made in the past. These include for example the choice to pay interest, the choice to abandon the ability to exchange money for gold, the choice to have money issued by banks only, or the choice to use paper money instead of silver coins. Hence money is not neutral but in effect and combination of these rules it serves some interests better than others.
Community Currencies or Complementary Currencies (both abbreviated CC) are currencies that have different designs and serve different purposes than our conventional money. They exist as a supplement to our conventional (national) money. “A complementary currency (…) is an agreement to use something else than legal tender (i.e. national money) as a medium of exchange, with the purpose to link unmet needs with otherwise unused resources” (Lietaer; Hallsmith 2006). ‘Unused resources’ refers in this context to goods and services (labor) offered, where no demand for them exists within the market-economy mediated by conventional money.
Because complementary currencies are often local currencies and serve distinct groups of people, they are also known as Community Currencies. Nevertheless, not all complementary currencies are local in nature and therefore ‘complementary currencies’ is broader description of the phenomenon that we describe. The term ‘alternative currency’ is also often used to describe such currencies but we deem it deceitful, as complementary currency are not designed to overcome or substitute conventional currencies. In addition, sometimes the term ‘private currencies’ is used, emphasizing that the currency is issued by individuals, businesses or NGO’s and not by authority of the government.
What is Money Anyway?
We cannot understand complementary currencies separate from other forms of money. We therefore need to understand first what money is. Money is essentially an instrument created to overcome the limitations of ordinary barter (reciprocal trade). The most important limitation of barter is that there’s not necessarily a reciprocal need for products or services. (e.g. when John is interested in exchanging apples for eggs with Jessica, but Jessica is not interested to receive apples, no exchange takes place). Secondly, products are hard to store and many products are perishable making hoarding difficult. (e.g. John cannot hoard apples indefinitely to exchange it at a later time). Thirdly, products can hardly be rated at their true value as one single unit of measurement lacks. How to express the value of an apple? It’s very inconvenient to say one apple is either worth 3 eggs, ¼ bread, 4 mushrooms, ½ broccoli or 1 potato. Hence, money overcomes the problems of simple barter by performing three essential functions: exchange, store of value and unit of account. In this way money is traditionally described in terms of what it does, rather than what it is. But to put it simply, money is an instrument to keep score of the value everyone has put into the economy, be it with services or goods.
Complementary Currencies as a Different Type of Money
In describing money and currencies we can make a distinction between legal tender and complementary currencies. Legal tender are the currencies issued under the authority of the government and, by national law, these are the valid means of payment for settling debts, both private and public. That means that, if the debtor pays with legal tender, the creditor needs to accept it. Legal tender is also the currency that the government of a country accepts as payment in taxes. Complementary currencies are all “moneys” that lie outside this realm of legal tender. That doesn’t make complementary currencies “illegal tender”! It simply means that their acceptance is voluntary and needs to be agreed upon by both parties of a transaction. As such complementary currencies are a broad group of innovative programs that strive to function in addition to the conventional money.
Different Complementary Currencies
The pilot currencies run in the CCIA project comprise a variety of different currencies, deemed to be best practice for their respective field and purpose. Read more about them on this website and find examples of other currencies through the online resources provided here.
(This text was adapte from the “Knowledge Center” of www.Qoin.org)