Complementary Currency - Types of Complementary Currencies

Types of Complementary Currencies

Complementary currencies describe a wide group of exchange systems, currencies or scrips designed to be used in combination with standard currencies or other complementary currencies. They can be valued and exchanged in relationship to national currencies but also function as media of exchange on their own. Complementary currencies lie outside the nationally defined legal realm of Legal tender and are not used as such. Rate of exchange, scope of circulation and use in combination with other currencies differs greatly between complementary currency systems, as is the case with national currency systems.

Some complementary currencies incorporate value scales based on time or the backing of real resources (gold, oil, services, etc.). A time-based currency is valued by the time required to perform a service in hours, notwithstanding the potential market value of the service. Another type of complementary monetary systems is the barter - an exchange of specific goods or services is performed without the use of any currency. In 1982, the most widespread auxiliary currency system – the Local Exchange Trading Systems was created. It regulates the exchange of goods and services between the members of the cooperative. Examples for an investment system of complementary currency are the Automatic Social Financial Network (ASFN) and the international crowd-sourcing and crowd-funding community Evolution RA whose members use their own complementary virtual currency “Сyber-gold”. The introductory fee paid by the new association members is subsequently directed toward investments in a variety of commercial projects.

Some complementary currencies take advantage of demurrage fees, an intentional devaluation of the currency over time, like negative interest. This stimulates market exchanges in the devaluating currency, propagates new participation in the currency system and forces the storage of wealth (hoarding) ability usually reserved for currency into more permanent and better value holding tools like (property, improvement, education, technology, health, equity securities, etc.) all of which are sheltered from the currency based demurrage fees.

Other experimental complementary currencies use high interest fees to promote heavy competition between participants, and the removal of wealth from long term wealth holding structures (natural/material wealth, property, etc.) to aid in the process of rapid industriaization, mass production, automation and competitive innovation.

Monetary speculation and gambling are usually outside the design parameters of complementary currencies. Complementary currencies are often intentionally restricted in their regional spread, time of validity or sector of use and may require a membership of participating individuals or points of acceptance.