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Climate change: transitions to sustainability
Climate change: transitions to sustainability

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4.3.2 Complementary currencies

Complementary currencies also demand a rethink of our economy, but have a more imaginative and radical edge. Because of the difficulties with conventional monetary systems, various alternatives are being tried. These are usually restricted to a particular group of people, and so are called ‘local’ or ‘complementary’ currencies. They are generally based in a local community and enable people to exchange goods and services without resorting to ‘traditional’ currency. Some are grassroots initiatives whereas others are set up by local governments for the purposes of community regeneration. There are now examples all over the world. Two of the more common systems are called local exchange trading systems (LETS), and ‘Time Dollars’ (USA) or ‘Time Banks’ (UK). Some use a sort of note, whereas others simply have recorded accounts. The unit of currency in the time-based systems is the Hour, and each LETS has it own currency name (e.g. ‘bons’ in Senegal, ‘Green $’ in Ontario, Canada, and ‘Buzzards’ in Leighton Buzzard, UK).

The biggest difference between local and national currency systems is one of relationship. Because they are restricted to a group of people who have some prior connection, they are more personal and encourage a spirit of trust and community. Bargaining is sometimes backwards: ‘That will be 2 hours.’ ‘No, you put so much into it that I think I should pay for 2.5 hours.’ There is usually no interest and no inflation by the nature of the system. Rather than using banks to create money by lending for interest, with LETS or Time Banks, money is created when one person's account is credited and the other's is debited. The system is fully under the control of the people who use it (Figure 16).

Figure 16
Figure 16 Time Banks: getting a good return on social capital. (Photo: New Economics Foundation)

Local currencies are proposed as the beginnings of a cooperative rather than a competitive economy because they are seen as a form of mutual support within a closed group. Transactions are driven more by need than by the desire to earn money. Although the number of local currency systems is growing rapidly, to date most of them make a useful, but still marginal, contribution to their local economies. In addition to reviving and underpinning a sense of community, these schemes are lauded for promoting a robust local economy. It is argued that this kind of economy has a much smaller environmental imprint than the parallel conventional economy.