Chapter 54 - Complementary Currencies

When there is a shortage of money in a community, it is common for Alternative Currencies or Complementary Currencies to spring into life. They are usually backed by the local business community or a local government. The Private Banking Corporations tend to dislike anyone encroaching on their monopoly of money creation and tend to encourage the central bank to crush the Complementary Currency by legal means or otherwise.

Alternative Currencies provide a useful decentralization of currency and encourage local loyalty. It is quite easy to have a network of competing community-based currencies that are interchangeable. There are many successful Alternative Currencies in use around the world.

The Wara
The Wara

Schwanenkirchen, Bavaria 1930.

Dr. Hebecker, the owner of a small bankrupt coal mine paid his workers in coal instead of legal currency. He issued a local script which he called the “Wara”. The Wara was redeemable in coal. The bill was only valid if a stamp for the current month was on the back of the note. This stamp charge is called ‘demurrage’. The demurrage charge discouraged hoarding. Hoarding also means saving. The workers soon found that the local businesses accepted the Wara. The use of this script was very successful. By 1931, the “Free Economy Movement” (Freiwirtschaff) had spread across of Germany. It was soon adopted by 2 000 companies across Germany. In November 1931, the German Central Bank prohibited the use of the Wara. The prohibition caused great hardship in the communities. Hitler may not have come to power had the Wara survived. Interestingly, the Nazis printed their own interest-and-debt-free-money based on human labor rather than gold in 1935. The Nazi’s interest-and-debt-free-money lifted the country out of poverty in a few years. It took much propaganda and a world war to crush them. After the war, they reverted to debt-based money. [2]

The Wörgl 1932

Wörgl, Austria during the Great Depression 1932

One-third of its population of 4,500 were without a job, and 200 families were penniless and many were in tax arrears to the town. Wörgl had debts and only 40 000 schillings in the bank. In 1932 Michael Unterguggenberger, the mayor introduced a Complementary Currency by issuing labor certificates. He deposited 40 000 schillings in a local savings bank as a guarantee and issued 32 000 labor certificates.

The town had a long list of projects including street lighting, road repaving, water distribution, and street tree planting. The labor certificates required a monthly stamp to remain valid. The stamp amounted 1% of the each note’s value and was effectively a negative interest of 1%. This is called demurrage. The profit was used to run a soup kitchen that fed 220 families.

The effect of the negative interest caused the holders spend them quickly. The town allowed anyone to exchange scrip for 98 percent of its value in schillings at the savings bank. This offer was rarely taken up.

All businesses in town accepted the local money except the railway station and the post office. When people ran out of spending ideas, they would pay their taxes early using scrip, resulting in a huge increase in town revenues. The council not only carried out all the intended projects, but also built houses, reservoir, ski jump, and bridge. The people also used scrip to replant forests, in anticipation of the future cash-flow from the trees.

The key to its success was the fast circulation of local currency within the local economy, fourteen times higher than the Austrian Schilling. This, in turn, increased trade and employment. At the time, Wörgl was the only Austrian town to achieve full employment.

Other villages copied the system successfully.

Wörgl’s local currency and other local currencies were declared illegal by Austria’s Central Bank in 1933. The town went back to 30% unemployment. In 1934, social unrest exploded across Austria. The rest is history. [3][4][5]

 Websearch: Wörgl Alternative Currency

The Bangla-Pesa - Kenya
The Bangla-Pesa - Kenya 2013

A settlement called Bangladesh in Kenya has formed a mutual-credit group called Bangladesh Business Network (BBN). Bangladesh Business Network has created a unit of credit called the Bangla-Pesa. It is valid within this mutual-credit group. Each business puts in about five dollars initial credit. The Bangla-Pesa is backed by the credit of the businesses. [6]

The Wir Switzerland

For eighty years a major not for profit, private currency has been operating throughout Switzerland. The WIR has about 60 000 firms involved and turns over the equivalent of about two billion Swiss Franks annually. Participants report about 10% extra turnover.

Local Energy Trading Scheme
Local Energy Trading Scheme

LETS (Local Energy Trading System) is a community based non-profit trading system that enables its members to exchange a goods and services. It is a method of trading which depends on energy, skills and time instead of money. Members exchange goods and services using the currency of locally created LETS credits.

If Jim does something for Mary for 20 LETS, his account is credited with 20 LETS and Jim’s is debited with 20 LETS. Money is created at the time of the transaction. Jim can then use her credits to exchange goods or services with someone else. It is a ‘mutual credit’ system which has no centralized authority issuing the money.

Money is never in short supply because the amount of money expands and contracts as needed. There is generally no interest charged other than minor fees to pay for administration. All transactions are done online.

The Bristol Pound is first city-wide local currency in Britain. Creative Commons Attribute - Andy Chalkley.
Bristol Pound

The Bristol Pound is Britain’s first city-wide local currency. It is the first to have electronic accounts managed by a regulated financial institution and the first that can be used to pay some local taxes. You can spend Bristol Pounds with paper notes, by mobile and online. Bristol Pounds are not legal tender so it is a voluntary scheme. There are now £100 000 in bank deposits.[7]


There are also the Totnes Pound, the Brixton Pound, the Stroud Pound, and the Lewes Pound


The "Debt Free” Italian Simec. In 2000, a wealthy Italian Professor, Giacinto Auriti, experimented with a debt-free currency hoping to prove that central bankers lowered the purchasing power of money by loaning it out at interest. Giacinto Auriti issued a debt-free alternative currency, called Simec, and offered it to the people in a small town called Guardiagrele, Italy. The Simec were a huge success. People discovered that one Simec had twice the purchasing power of the lire and were eager to shop with the alternative currency. Two and a half billion Simec circulated rapidly. This program needed a wealthy benefactor to get it going, but it still shows the great potential of debt-free currency to facilitate economic growth and prosperity.


The Bitcoin is revolutionary. It is an independent internet currency. It allows peer to peer trading worldwide with basically no fees. Bitcoins can be transferred through a computer or smartphone without an intermediate financial institution. Bitcoin is better described as a digital cryptocurrency. It exists as individual coins which are owned by and individual. Ownership of the coin is transferred when a payment is made. So a coin has a value and a series of ownership transactions attached to it. The ownership travels with the coin making it closer to Cash Currency where a cash note is owned by the person holding the note. This is less reliant on the record keeping of balances in a central computer. This type of system is more appropriate for a government. It is entirely different to the balances of virtual credit in bank accounts. They do not rely on double entry accounting and they cannot be counterfeited. [8]


BerkShares are a local currency in western Massachusetts. More than 400 Berkshire businesses accept the currency, and thirteen banks serve as exchange stations.

Ithaca Hours

Ithaca Hours is a local currency in Ithaca, New York.

The Chiemgauer

The Chiemgauer is a school currency project in Southern Germany. The project has been massively successful.

The RES in Belgium

The value of the RES is attached to the Euro. There are more than 5 000 businesses and 100 000 consumers who are using RES across Belgium. Turnover in 2009 was 34 million Euro. Merchants and consumers can open a RES-account for free. Loans without interest are also available for affiliated merchants because the RES system’s remuneration is based on transactions and not on credit.

The Community Exchange System

The Community Exchange System (CES) is a community-based exchange system that provides the means for its users to exchange their goods and services, locally and remotely. It is a global complementary trading network that operates without physical money. [9]

Time Banks

Time-Banking is a community currency system where members trade volunteer services with one another. The unit is one hour of time usually called Time Dollar or Time Credit. For every hour participants ‘deposit’ in a Time-Bank, they can ‘withdraw’ equivalent support in time when needed. Everyone’s time is equal. There are more than eighty Time-Bank in the USA and one hundred in the UK.

Other Advantages of Complementary Currencies

Complementary Currencies can create many other benefits for a local society beyond the advantage of an addition to the local Money Supply and the benefits for local trade. There are social networking effects at work when the locals purposely go out and seek local product. Social interaction increases and enthusiasm for local product and activities increase. As local efforts are held in higher esteem, there is an increase in the self-worth of active participants. Even when there is no measurable economic benefit, the social effect may make the Complementary Currency worthwhile on its own. Participants are prone to boosts in confidence and boosts in self-worth as they contribute to the local society in a meaningful manner.

Further Reading

 Websearch:complementary currency

 Websearch:alternative currency

Rev. Henry Swabey: “The result of losing a local mint is hard to estimate. It has been said of the older civilizations that ‘any contribution to local autonomy contributed to their stability.’ After centuries of centralization, experiments were carried out in Guernsey and Wörgl with the equivalent of local mints and were most successful. They were suppressed, perhaps, in fear that the success might endanger the money monopolists.” [1]