Complementary and alternative currencies

Aug 8, 2018 by

In his lecture Tobias Plettenbacher talked about complementary and alternative currencies. He understands those as really complementary, which means that they are not replacing the national currency, but exist next to it and fulfill social needs. For example, he mentioned Local Exchange and Trading Systems (LETS), Barter Exchange Circles, Time Banks and Energy or Resource Currencies.

He splitted the different forms in the following three areas of coverage:

  • Covered by a national currency, which can be exchanged to the local currency and includes Regional money as Well as Shopping vouchers.
  • Based on services and debts that include (1) Mutual credit system, or Barter Circles that coexist next to national currencies, but can not be exchanged and (2) time based Systems, where time can be spent and exchanged. LETS are examples of that.
  • Uncovered, where no payment and no money is involved. The focus is the contribution to society.

As one example for the regional money we discussed the “Chiemgauer”, which is used in a southern region of Germany. As it is a form of regional money it can be changed to Euros and vice versa. But if you change the Chiemgauer into Euros a 5% commission fee is paid, which subsidises local community clubs. At the beginning the commission fee was 10%, but it turned out, that this was a too big loss for companies and individuals to exchange it. Additionally to ensure the flow of the currency and give incentives for buying a so called demurrage has been introduced, which means that there is a negative interest of 8% per year. Nevertheless the side effect can be an increase in local consumption, which may increase footprints and contributes to CO2 emissions. As mentioned above the Barter Circle System is not covered by a national currency, but has the same value. Here the “Wir Bank” serves as an example. Since 1934 it gives out an alternative currency, which can only be used in Switzerland. The WIR Franc is a virtual currency with very low interest rates. It is used to enhance sales and cash flows within Swiss regions. And a credit system has been established whereby credits are issued, in WIR Francs, to its members.

Time banks serve the issue of interacting and including people into society. Often there are intergenerational relations where younger people help elderly and vice versa. They can earn time credits by helping and exchanging skills to each other. Accumulation of hours is not the goal of this system, the goal is to meet other people, get care when you are retired and furthermore strengthen communities. The Fureai Kippu, or “Care Relation Ticket” in Japan, is the largest existing time saving system. It is a provident time bank that motivates people to give help to other people and earn hours to have them when they need help themselves. Additionally it is possible to give away hours. Here the condition is that the system operates nationwide and is accepted by the national authorities.

Benefits of complementary currencies can be that they strengthen local communities and economies. Their operation can lead to sustainable development on a local level, resilience and solidarity. Additionally promotion of cultural and educational activities. But the implementation is a long process and needs right regulation circumstances and the acceptance of the whole community.

In conclusion of today’s lectures it can be said that the Euro is not just a mode of exchange, it also become a mode of speculation to feed banks while local currencies support local projects and develop a real economy on the ground. Which means it exists for the people and follows the social aspects. If we try to resolve the problem of the 20th century with the old model we might be going into troubles. We all agree that there is the need to embrace a new way of monetary thinking.


Written by: Milan Kajkut, Florian Schanznig and Elena Allesch

Based on the lecture by: Tobias Plettenbacher (“Complementary and alternative currencies”)