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Complementary currencies

Can a community print its own money? The short answer is a resounding YES and for many this has become a symbol of a Transition town taking the local economy into its own hands. We are very used to using money for exchange and will likely still need it in some form, but ideally one that reduces the problems with conventional money.

We generally think of money as created and guaranteed by national governments. In fact most money is created by private banks, through the process of offering loans (see more on how money is created). Historically, money has been created in a range of ways and forms, including credit notes issued by companies and individuals, or as issued by local banks. Currencies that circulate mostly locally within a community have been created many times in the past, especially at times of economic hardship, when any official currencies are in short supply.

There is now a strong ‘complementary currency’ movement that enables communities to create their own money. These are complementary in the sense that they are not legal tender, so no-one has to accept it in exchange for goods or services. This means that it can be difficult to get businesses to accept them, as they can only spend them in limited places.

Local currencies with printed notes

A form of local currency that has become popular with Transition towns in the UK uses printed notes, based on Berkshares, a local currency circulating the Massachusetts, USA. There are Lewes Pounds, Brixton Pounds, Bristol Pounds, Stroud Pounds, Totnes Pounds etc. where, as the name suggests, the notes are meant to be roughly equivalent to the national currency.

The currency is issued by an organisation, who keep an equivalent amount of the national currency, so it can always be converted back to the national currency. People exchange sterling for the local currency equivalent at a number of points in the town (usually shops). Some schemes offer discounts or put expiry dates on the notes to encourage use.

Local businesses are recruited who will accept it. The point of a local currency is to promote the local economy as it can only be spent with participating businesses, and also to give people a sense of ownership of their money. However, it does not create new money and can only work where people have sterling in the first place.

Here’s a handy guide that explains how to set up a local currency, based on the Lewes Pound.

Local electronic currencies

Some of the newer currencies of this sort also allow transactions to be made by text message or online, which greatly increases their flexibility.

In Brixton, they have partnered with the local council, so that council employees can choose to receive some of their salary in Brixton pounds. Here’s a short video showing how the system works:



In Bristol, they have partnered with the Bristol Credit Union as well as the council. Some local taxes can be paid using them, for example business rates, which adds to their credibility and acceptability. The first Mayor of Bristol is even being paid in Bristol Pounds!

Mutual credit systems

While the local currencies with printed notes don’t actually create new money because they are backed by the national currency, there are other kinds that do. For example, you may have heard of LETS (local exchange trading systems) and Time Banks which are examples of mutual credit systems…

Local Exchange Trading Systems

If Amanda does something for Bruce for 10 LETS, her account is credited with 10 LETS and Bruce’s is debited with 10 LETS. That is the moment at which the money is created. Amanda can then use her credits with someone else in the system. There is no central money-issuing authority, so it is a ‘mutual credit’ system.

In a mutual credit system, the amount of money in circulation expands and contracts as it is needed, so it is never in short supply. There is generally no interest charged in a mutual credit system, but there may be fees to keep the system going. There is generally a directory that lists what people are offering and want, issued frequently in print and/or available online.

LETS are a popular form of local currency that has been around since the 1980s. It has no printed notes or coins, but gives its currency unit a distinctive local name (Beams, TEM, bobbins, …) and keeps a record of all transactions. The value of a currency unit is often, but not necessarily, notionally the same as the national currency. A LETS is a community enterprise, like any other, and needs active volunteers to run it.

To see if you have a local LETS scheme check at LETS-linkup.

If you want to set up a LETS there is a lot of support available. You can use online software to keep your records from several organisations including:

Community Forge is a non-profit association that designs, develops and distributes free, open- source software for building communities with currencies. Free hosting is also offered. It’s currently used by about 40 communities.

The Community Exchange System (CES) is a community-based exchange system that provides the means for its users to exchange their goods and services, both locally and remotely. This is well established with several hundred communities using it, for a LETS or Time Bank style currency.

Because it creates new money, a mutual credit system can be a lifeline in places where conventional money is very scarce. Many are springing up in places hit by the financial crisis, for example, in a village in Greece as shown in this video:




Time Banks are a form of mutual credit where the currency used is hours. For every hour participants deposit in a time bank, perhaps by giving practical help and support to others, they are able to withdraw equivalent support in time when they themselves are in need.

It is mostly commonly used for social services, particularly to people in need. In the UK, Time Banking UK is government supported and provides training for people wanting to start a time bank as well as a directory and a step-by-step guide.

Time banks, like LETS, strengthen communities by helping people find means to do things for each other. It is like an organised exchange of favours, so is helping enable a gift economy.

Further reading and links

The Transition Guide to Local Money by Pete North.

Wikipedia article on LETS - describes LETS and gives the history.

The International Journal of Community Currency Research – an online journal that provides a forum for the dissemination of knowledge and understanding about the emerging array of community currencies being used throughout the world, both at present and in the past.

Here’s a chapter from Charles Eisenstein’s Sacred Economics about local and complementary currencies.

Credits: Main Image Source: Bristol Pound and many thanks to Gary Alexander for creating this content.

What do you think? Leave a comment below.

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