COMPLEMENTARY CURRENCIES
Complementary currencies are alternative monetary systems designed to function alongside the
mainstream currency. They are often created by local communities, businesses, or organizations to
address specific economic, social, or environmental challenges. These currencies can take various forms,
including paper notes, digital tokens, or time-based credits. Here are some examples of complementary
currencies and their purposes:
1. Local Currencies: Local currencies, such as the Bristol Pound in the United Kingdom, are
designed to support local businesses and foster economic resilience within a specific region. By
encouraging people to spend within their community, these currencies can help circulate wealth
locally and create stronger social bonds.
2. Time Banking: Time banking is a complementary currency system based on the exchange of
services. In this system, members earn time credits by offering their skills and services to others
within the community. These time credits can then be exchanged for services provided by other
members. Time banks promote community engagement, resource sharing, and social cohesion.
3. Business-to-Business (B2B) Barter Networks: B2B barter networks facilitate the exchange of
goods and services between businesses without the need for traditional currency. These
networks, such as the Swiss WIR Bank, can help businesses optimize their resources, reduce
cash flow constraints, and expand their customer base.
4. Social Currencies: Social currencies are designed to address specific social challenges or promote
positive behavior. For example, the Fureai Kippu in Japan is a currency that rewards people for
providing care services to the elderly. This system encourages social participation and helps
address the challenges associated with an aging population.
5. Environmental Currencies: Environmental currencies aim to promote sustainable practices and
protect natural resources. Examples include the Regiogeld in Germany, which supports organic
farming and renewable energy projects, and the CarbonCoin, a digital currency that funds
reforestation efforts.
Complementary currencies can offer several benefits, such as stimulating local economies, fostering
social connections, and promoting sustainable practices. However, they also face challenges related to
scalability, regulatory compliance, and the potential for misuse. To ensure the success of
complementary currencies, it is essential to create robust systems that effectively address these
challenges and maximize the positive impact on the communities they serve.
To function as a medium of exchange, complementary currencies must have liquidity, meaning they
must be easily convertible to goods, services, or other forms of currency. Complementary currencies are
more likely to emerge in times of economic stress, such as during recessions or periods of
hyperinflation, as they can help address liquidity issues by providing alternative means of exchange.
1. Addressing liquidity problems: In times of financial crises, traditional money may become scarce,
leading to reduced spending, decreased economic activity, and increased unemployment.
Complementary currencies can help overcome these liquidity problems by providing a parallel
medium of exchange that stimulates local economic activity. For example, during the Great
Depression, various “scrip” currencies emerged in the United States to facilitate local trade and
alleviate the impact of the crisis.
2. Emergence during recessions: Recessions often lead to a decline in consumer spending, business
investment, and overall economic activity. Complementary currencies can emerge as a response
to these challenging conditions by promoting local trade, supporting small businesses, and
encouraging community engagement. By circulating within a specific region or community,
these currencies can help retain wealth locally and enhance economic resilience.
3. Emergence during hyperinflation: Hyperinflation erodes the value of a national currency, leading
to a loss of confidence in the monetary system and difficulties in exchanging goods and services.
In such situations, complementary currencies can provide a more stable and reliable medium of
exchange. For instance, during the hyperinflation period in Argentina in the early 2000s, local
communities created various alternative currencies, such as “creditos” and “patacones,” to
facilitate trade and maintain economic activity.
In summary, complementary currencies can emerge in response to liquidity problems, recessions, or
hyperinflation, as they offer an alternative means of exchange that supports local economies and
mitigates the impact of economic crises. By fostering community engagement, promoting sustainable
practices, and enhancing economic resilience, complementary currencies can play a crucial role in
addressing various economic challenges.
The modern economy is highly dependent on oil for transportation, and in many cases, more oil is
consumed in transportation than in production. This heavy reliance on oil has led to concerns about
environmental sustainability, economic resilience, and energy security. As a result, there has been a
growing movement to localize economies and reduce dependence on fossil fuels.
Transition Towns, a grassroots initiative founded by Rob Hopkins, aims to create resilient communities
by promoting local economies, sustainable practices, and reducing reliance on non-renewable
resources. Transition Towns focus on various aspects of community life, including energy, food,
transportation, and local currencies.
New ‘town pound’ currencies, such as those introduced in Lewes and Totnes, have emerged as part of
the Transition Town movement. These local currencies are designed to encourage spending within the
community, support local businesses, and promote economic self-reliance.
The financial crash of 2008 highlighted the vulnerability of communities to global economic trends.
Activists from the Bristol Transition Town recognized the potential of local currencies to insulate their
town from such external shocks. The purpose of introducing a local currency in Bristol was not merely to
increase liquidity, but to change purchasing behavior in favor of local, independent businesses.
This approach is rooted in the theory of the ‘local multiplier effect,’ which posits that money spent
within a local economy has a greater impact than money spent in larger, non-local businesses. When
consumers support local businesses, more money stays within the community, leading to increased
economic activity, job creation, and overall community resilience.
In conclusion, the drive to localize economies and reduce dependence on oil has led to initiatives such as
Transition Towns and the introduction of local currencies like the Lewes and Totnes pounds. These
efforts aim to create resilient communities that can better withstand global economic trends and
promote sustainable, locally-focused economies.
A resilient, inclusive, and sustainable city economy has several key characteristics that contribute to its
overall success and longevity. By focusing on localizing supply chains, reducing transport-related CO2
emissions, and keeping wealth within the local economy, cities can create a diverse and vibrant
economic landscape that benefits all residents.
1. Localized supply chains: By sourcing goods and services from within the community, cities can
reduce their dependence on external resources, increase self-sufficiency, and support local
businesses. Localized supply chains also tend to be more adaptable to disruptions, increasing
overall economic resilience.
2. Reduced transport-related CO2 emissions: Transitioning to greener modes of transportation,
such as public transit, biking, and walking, can significantly reduce a city’s carbon footprint.
Additionally, sourcing goods and services locally can decrease the need for long-distance
transportation, further reducing CO2 emissions.
3. More wealth staying in the local economy: When consumers spend money at local businesses,
more wealth is retained within the community. This can lead to increased economic activity, job
creation, and a higher standard of living for residents.
4. More and better opportunities for people: A resilient and inclusive local economy provides a
wider range of employment and entrepreneurial opportunities for residents, fostering social
mobility and reducing income inequality.
5. Diverse and vibrant local economy: A local economy with a diverse mix of businesses and
industries is more resilient to external shocks and better equipped to adapt to changing market
conditions.
6. Best business network for Bristol’s SMEs (Small and Medium-sized Enterprises): A strong and
supportive business network can help SMEs thrive by providing resources, mentorship, and
collaboration opportunities. This, in turn, fosters innovation, job creation, and economic growth.
7. Vibrant high streets and communities: By supporting local businesses and encouraging residents
to shop locally, cities can create lively and attractive high streets that serve as hubs for social
interaction and community engagement.
In conclusion, creating a resilient, inclusive, and sustainable city economy requires a focus on localizing
supply chains, reducing transport-related CO2 emissions, and ensuring that wealth stays within the local
economy. By doing so, cities can foster diverse and vibrant local economies that offer more and better
opportunities for residents while promoting environmental sustainability and strong communities.
Since its launch in 2012, the Bristol Pound (abbreviated as £B) has experienced significant growth and
success, becoming the largest local currency in the UK. The Bristol Pound is available in both paper and
digital forms, with an online portal and an app for convenient transactions. In a groundbreaking move,
residents in Bristol City Council areas can even pay their local taxes using the £B, showcasing the
currency’s widespread acceptance and utility.
Membership has been steadily increasing, with over 1500 individual members and more than 500
business members participating in the Bristol Pound ecosystem. In terms of scale, the circulation of the
Bristol Pound reached an impressive milestone of approximately £B1 million in 2019. Interestingly, the
majority of transactions were conducted through digital means, with only about 10% of the total value
represented by paper money.
The Bristol Pound’s growth and widespread adoption demonstrate the potential of local currencies to
support local economies, foster community engagement, and promote sustainable practices. By offering
both paper and digital forms of currency, the Bristol Pound has made it easy for residents and
businesses to participate in the local economy, ultimately contributing to the city’s resilience, inclusivity,
and sustainability.
The initial marketing and tone of voice for the Bristol Pound needed to evolve in order to address some
challenges and shortcomings:
1. Exclusive messaging: The original message seemed exclusive, making the currency appear
irrelevant to a broader audience. This issue needed to be addressed to encourage wider
adoption.
2. Lack of positive relationships with larger businesses: The initial approach failed to foster positive
relationships with bigger businesses, which are crucial for the currency’s success and
sustainability.
3. Flawed business model: The original business model, which relied on transaction charges, was
found to be ineffective for generating net income with the available technology. Moreover,
transaction charges discouraged the use of the currency.
4. Redeveloping the digital solution: The digital infrastructure, based on credit union and Cyclos
systems, was clunky, costly, and prone to glitches. The app and portal functionalities were not
suitable for larger businesses, limiting their engagement with the currency.
5. Regulatory restrictions: The credit union’s regulatory restrictions limited the Bristol Pound’s
ability to experiment and access its data, hindering its growth and adaptability.
In order to overcome these challenges, it was necessary to reassess the marketing approach, messaging,
and the currency’s underlying infrastructure. By addressing these issues, the Bristol Pound could
become more inclusive, relevant, and efficient, ultimately leading to a more resilient and vibrant local
economy.
It was initially hoped that the Bristol Pound would encourage businesses to change their supply chains
and payment methods to support the local economy. However, some obstacles emerged:
1. Established supply chains: Businesses often join the Bristol Pound network with trusted
suppliers already in place. Changing suppliers based solely on the payment method is not a
compelling enough reason for businesses to disrupt their existing relationships.
2. Bookkeeping challenges: Adopting the Bristol Pound as a payment method can complicate
bookkeeping for businesses, as they must manage transactions in both the local currency and
the national currency. This added complexity can discourage businesses from fully embracing
the Bristol Pound.
3. Resistance to change payment methods: Even if businesses are willing to change their suppliers,
they may still be reluctant to process payments through the Bristol Pound, as it adds another
layer of complexity to their financial management.
To address these challenges, the Bristol Pound initiative would need to:
1. Offer incentives for businesses to change suppliers or adopt new payment methods, such as
providing added value, convenience, or cost savings.
2. Simplify bookkeeping by offering tools or resources to help businesses easily manage
transactions in both currencies.
3. Foster a greater sense of community and trust among businesses in the network, emphasizing
the benefits of supporting the local economy and enhancing the attractiveness of the Bristol
Pound as a payment method.
To address the challenges faced by the Bristol Pound and ensure its long-term success, several steps can
be taken to improve the currency’s sustainability, scalability, and user experience:
1. Develop a sustainable business model: Collaborate with the University of Bristol to research the
needs of small and medium-sized enterprises (SMEs). Based on the findings, create services that
provide real value and cater to the needs of local businesses. Launch new services and
membership options to attract more businesses to the network.
2. Scale up for greater impact: Implement a rebranding strategy to make the Bristol Pound more
fun, engaging, and appealing to the community. Introduce Community Champions –
ambassadors who promote the currency in their local neighborhoods and encourage others to
join the network.
3. Design a new platform with a data-driven approach: Utilize data analysis to understand user
behavior and preferences, and use these insights to enhance engagement and usage of the
Bristol Pound.
4. Improve the digital experience for all users: a. Consumers: Create a frictionless experience by
simplifying transactions, providing an easy-to-use app, and offering rewards or incentives for
using the local currency. b. SMEs: Integrate the Bristol Pound platform with popular accounting
software like Quickbooks and Xero to streamline financial management for businesses. c. Larger
partners: Develop solutions that cater to the unique needs of large organizations, such as
accommodating a vast number of tills or implementing custom payment systems.
By focusing on these strategies, the Bristol Pound can strengthen its position in the local economy,
support more businesses, and promote a more resilient, inclusive, and sustainable city.
These challenges highlight the importance of addressing various economic, environmental, and social
issues within the city:
1. Transaction charges: With an estimated £10 million leaving the city in transaction charges, it is
crucial to develop a local currency system that minimizes these fees and retains more wealth
within the community.
2. Zero carbon and just transition: As part of the global movement towards reducing carbon
emissions, cities like Bristol must promote sustainable practices and support businesses that
contribute to a greener, more equitable future.
3. Air quality: Tackling air pollution is crucial for public health and well-being. Encouraging greener
transportation methods, supporting businesses that minimize emissions, and implementing
policies to improve air quality are essential steps.
4. Adult social care crisis: Addressing the growing demand for adult social care requires innovative
solutions, including promoting community-based care programs and investing in local services
that cater to the needs of vulnerable populations.
5. Death of the high street: Revitalizing local high streets involves supporting independent
businesses, promoting local shopping, and creating vibrant community spaces to attract
residents and visitors alike.
6. Rise of cashless society and impact on the unbanked: As society moves toward cashless
transactions, it is crucial to ensure that financial services remain accessible to all, including those
without bank accounts. Developing alternative payment methods and providing financial
education can help bridge this gap.
7. Ethical data concerns in the field of payments: As technology advances and data becomes more
valuable, it is essential to address ethical concerns surrounding data privacy, security, and
usage. Implementing transparent and responsible data management practices can help build
trust among consumers and businesses.
By addressing these challenges, cities like Bristol can work towards creating a more inclusive,
sustainable, and resilient local economy that benefits all residents.