“The government isn’t the only entity allowed to issue money. Private citizens and businesses can too, and throughout U.S. history, they often have.” — U.S. Federal Reserve Bank, Clevand
Complementary currencies are exactly what the name implies – forms of money that complement national currencies and work alongside them.
They have a long history reaching back to ancient Egypt. Today there are around 5,000 in use around the world. Among the most well-known are the Bristol and Brixton pounds in England, the Chiemgauer in Germany and BerkShares in Massachussets. The most successful complementary currency is the WIR in Switzerland, used within a nationwide business network. In 2017, the WIR bank held assets equivalent to more than $5.6 billion USD.
Also known as alternative or local currencies, complementary currencies help to keep wealth circulating locally since their use is confined by design to particular towns or regions. In this way they support local small businesses which then recirculate that money within the community. Complementary currencies also buffer local economies from large-scale volatility at times when the national currency is scarce, and allow for local employment in local projects at any time. An enhanced sense of shared community is a beneficial side-effect.
Whether local or global, all economies rely on money. Yet our financial system has created monetary monocultures. These are inherently unstable, vulnerable to shocks and boom-and-bust cycles. As with any natural system, there is strength in diversity. Complementary currencies provide this resilience, helping to smooth out the shocks that monocultures inevitably deliver.
In situations where the complementary currency can be obtained without having to buy it with national currency, such as when it is granted or earned, it provides buying power to segments of the community that have low levels of national currency.
These systems have historically been the most successful, as they inject debt-free money into the economy. A whopping 97 percent of the U.S. money supply is created by private banks when they make loans, and this money-as-debt paradigm is the norm worldwide. Because the banks only the principal on their loans but still demand interest, there is never enough money to pay off all the debt. Scarcity, bankruptcies and expansion-contraction cycles are built into the system. By providing debt-free money, complementary currencies mitigate the effects of these features.
“Examples of private money arose to serve purposes that were not well served by government-provided money. These purposes include having a currency suited for making small purchases, having a medium of exchange in remote locations, and having a means of exchange during financial panics.” — U.S. Federal Reserve Bank, Clevand
Writing about the use of “stamp scrip” a kind of complementary currency used during the Great Depression, the Cleveland Federal Reserve noted that,“Stamp scrip was issued by municipalities, civic organizations, business organizations, and individuals. Municipalities issued stamp scrip as a source of revenue. The Great Depression caused an erosion in taxpayer income, an increase in taxpayer delinquency rates, and even tax strikes in some communities. All of these took their toll on municipal revenues.
Municipalities could make up the shortfall by making purchases and paying workers with stamp scrip. Civic organizations issued scrip to promote employment and various civic projects.”
Abundance is Possible
Too many communities throughout the country today find themselves similarly short of national currency. Roads remain unrepaired, schools are underfunded, ambulances break down, libraries close, community centers shutter. Complementary currencies can not only soften the pain of austerity, but can usher in a new era of prosperity and local empowerment.
See the Money section for a more in-depth exploration of money and the role of complementary currencies.
FRENCH BASQUE COUNTRY'S LOCAL CURRENCY IS A HIT
Now other European communities hope to replicate its success.
Inspired to bring Basque pride back to the region, in 2013 Edme-Sanjurjo and about a dozen volunteers launched a euro-equivalent micro-currency. Their aim was to reinvigorate enthusiasm for their cultural and linguistic roots and keep money within the French-Basque region by supporting local businesses.
Flash forward to October 2018, and their micro-currency, coined the eusko (pronounced ‘you-s-ko’), reached the equivalent of €1 million in circulation, making it the most successful of such monetary experiments in Europe.
Today, 17 municipal governments and 820 local shops, businesses and associations in the French Basque Country accept the eusko as legal tender.
Euskal Moneta – the organisation headed by Edme-Sanjurjo that manages and prints the currency – says two to three new eusko accounts are being opened daily with them.
While the idea of printing your own money might seem radical, the concept of micro-currencies is far from novel. Indeed, Euskal Moneta was inspired by the Chiemgauer, a micro-currency that has been available in Chiemgau region in Upper Bavaria, Germany, since 2003. Today, there are as many as 10,000 to 15,000 micro-currencies operating worldwide, including about 60 in France, which legalised them in 2014.
When eusko online accounts were launched in 2017 – making it the first French local currency to offer both digital and physical notes, according to Edme-Sanjurjo – the pace of adoption accelerated.
Today, 60,000 eusko are now being exchanged from euro each month, according to Euskal Moneta, which has garnered attention from other European communities hoping to replicate the French Basque’s micro-currency success.
“The Institute of the Circular Economy of Wales is preparing a report for the Welsh Government. The Belgian federation of alternative finance, which supports more than 20 Belgian local currencies, is also in contact with Euskal Moneta. And we are regularly contacted about local currency projects from throughout Spain,” Jean-René Etchegaray, mayor of Bayonne and president of the Basque Municipal Community, told me.
“At first it [introducing the eusko] was quite difficult,” Edme-Sanjurjo recalled. “Nobody knew about local currencies. But the eusko hit critical mass quickly, achieving a relatively large circulation in the small-size world of micro-currencies.
“Within the first six months of its launch, the eusko became the most developed local currency in France,” Edme-Sanjurjo recalled.
“About 84% of businesses have never changed eusko [back] to euro. They always find a way to use them with other local eusko businesses,”
At Poloko Hiriondo Ikastola, Bayonne’s immersive Euskara school, 19 out of 58 families now pay their dues with eusko . . . benefits from the eusko program amount to €1,000 a year, which is put towards buying books, stationery and healthier meals for students.
Christelle Ksouri Perez, owner of L’Ambre Bleu, a shop filled with decorative art pieces . . . began accepting the eusko . . . to “support local merchants and for the redistribution of the local market”. Serge Lamiscarre, the owner of vintage shop Intramuros Bayonne, said, “It creates a community and new links between people”.
The above is excerpted from an article by Justin Calderon for the BBC, April 19 2019.
DOCUMENTS RELATED TO OUR CURRENCY RESEARCH
Money – A Time For Change, 2018.
Explores the topic of money in society and how the current way in which money is created by banks and what that means to society. It is followed by the alternative of money being created by the rest of society for its own benefit.
Complementary Currencies in Use, 2018.
Explores examples of the historical and contemporary uses of complementary currencies. Excerpts from.U.S. Federal Reserve publications affirming the legitimacy of complementary currencies.