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17 March 2010

Complementary currencies

Filed under: Economics, sustainability, vision, Zeitgeist — David Wood @ 11:49 pm

Recently, I mused about a world economy without money.

Two replies – from Peter Jackson and from Marios Gerogiokas – independently drew my attention to a different notion: complementary currencies.

In brief:

  • Rather than seeking to fix our current economic and social dilemmas by reducing the number of monetary systems from one to zero – as proposed by the Zeitgeist Movement – this alternative idea proposes increasing the number of monetary systems, from one to more-than-one.

Marios drew my attention to a TEDxBerlin talk by Belgian economist Bernard Lietaer, “Why this crisis? And what to do about it?“:

The talk takes a bit of time to get going, but it makes an increasingly interesting series of points:

  • We need resilience in our economic structures, as well as efficiency;
  • One way to achieve resilience is to avoid mono-culture;
  • Having “complementary” currency systems running in parallel is one way to avoid monetary mono-culture;
  • Without adoption of complementary currencies, we risk repetitions of the recent economic crash.

Here’s one quote that struck me:

Complementary currencies are now where open source software and microfinance were 10 years ago.

And another:

It would be crazy to believe that we’re going into the information age, and the most important information system – our money – will not change.

Personally, I see it as much more likely that our monetary system will evolve and improve rather than it will be removed altogether.

Of course, there are risks in any such evolution (just as there are risks with the status quo).  Some of the reasons for the recent economic crash, after all, were the innovative financial systems (with an alphabet soup of acronym names) that turned out to be insufficiently understood.

Footnote: There’s more about the concept of complementary currency on Wikipedia.

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6 Comments »

  1. I like this to an extent. From a systems engineering point of view the comments about sustainability being a product of efficiency vs. resiliency are very apt.
    However, I can’t help but feel projects like the Lewes pound are flawed. One of the big draws of large monetary systems like the Euro, is simplicity. The process of changing currency costs both money (commision fees) and time, where as before this money was distributed out to the local community it now goes to the banks to fund beaurocracy. Which is bad. But from the consumers point of view it is good as it saves them time keeping more money in the community.

    I think the problem with this talk is that it’s too woolly. If we are going to have complimentary currencies we need automated ways of dealing and trading them so it unburdens the consumer. It just seems unrealistic and intangible.
    The real way forward is services like Zopa and more and more modern banking start-ups willing to refactor the way bank processes work so they are more benificial for the consumer.
    Essentially if we could *solve* the problem of the 30-90 days delay’s in payment (which is manufactured anyway, it should be instant?) then we would negate the need for compilmentary currencies.

    Comment by Simon Kenyon Shepard — 19 March 2010 @ 4:02 pm

    • Simon,

      My understanding of the pros and cons of complementary currencies is still at a very rudimentary level. I agree that the TEDx Berlin talk by Bernard Lietaer is very short on detail, but he has written longer books, and he has a website with other material.

      What interested me was that two people I respect had independently mentioned that topic in their comments to a previous blogpost – so I thought I should start to investigate this topic.

      Thanks too for the link to Zopa. As you say, there’s considerable scope for innovation and improvement in how banks actually serve their customers.

      Comment by David Wood — 19 March 2010 @ 6:52 pm

  2. A true currency circulates as it represents a “unit of account” that has an intrinsic stored value that is accepted in the marketplace. For example take a look at WIR Bank in Switzerland, an excellent example of a complementary currency

    Comment by CC Banc — 14 February 2011 @ 12:04 am

  3. […] from Jáchymov in Bohemia, all of which spread widely and lasted centuries. On the other hand, complementary currencies are still going strong, witnessed by the fact that 2013 will be the year of the Second […]

    Pingback by Los Angeles - Economies Go Alternative — 12 December 2012 @ 2:48 am

  4. […] from Jáchymov in Bohemia, all of which spread widely and lasted centuries. On the other hand, complementary currencies are still going strong, witnessed by the fact that 2013 will be the year of the Second […]

    Pingback by Economies Go Alternative « Marian Salzman — 12 December 2012 @ 3:12 am

  5. […] from Jáchymov in Bohemia, all of which spread widely and lasted centuries. On the other hand, complementary currencies are still going strong, witnessed by the fact that 2013 will be the year of the Second […]

    Pingback by Economies Go Alternative | Havas Worldwide Prosumer Reports — 13 December 2012 @ 6:05 am


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