Alternative currency

Not to be confused with private currency or complementary currency.

Alternative currency is a term that refers to any currency used as an alternative to the dominant national or multinational currency systems (usually referred to as national or fiat money). Alternative currencies can be created by an individual, corporation, or organization, they can be created by national, state, or local governments, or they can arise naturally as people begin to use a certain commodity as a currency. Mutual credit is a form of alternative currency, and thus any form of lending that does not go through the banking system can be considered a form of alternative currency.

When used in combination with or when designed to work in combination with national or multinational fiat currencies they can be referred to as complementary currency. Most complementary currencies are also local currencies and are limited to a certain region.

Barters are another type of alternative currency. These are actually exchange systems, which only trade items; thus without the use of any currency whatsoever. Finally, LETS is a special form of barter which trades points for items. One point stands for one man-hour of work.

Often there are issues related to paying tax. Some alternative currencies are considered tax-exempt, but most of them are fully taxed as if they were national currency, with the caveat that the tax must be paid in the national currency. The legality and tax-status of alternative currencies varies widely from country to country; some systems in use in some countries would be illegal in others.

Examples of alternative currencies

• In the Great Depression, people and corporations used gift certificates as a form of currency.
• WIR Bank - One of the oldest and most successful complementary currencies, founded in 1934, oriented towards small and mid-sized corporations, with 62,000 members.
• Valun System proposed by E.C. Riegel
• Calgary Dollars
• Salt Spring Dollars
• EarthE Money is used to reward environmental actions.
• Toronto Dollars is another example of a backed local currency. [1]
• Stroud Pound
• LETS, an example of Mutual credit, is a type of local currency used in a number of small communities worldwide.
• The Time Dollar is a state-sponsored alternative currency in the U.S, designed to encourage the independence and productivity of welfare recipients.
• Liberty Dollar is a private currency backed by silver, and is designed to be the nationwide alternative currency in the United States.
• Phoenix_Dollar - The Phoenix dollar is bullion silver similar to the Liberty Dollar in that it is available in various sizes and weights. It can also be used as private, voluntary, barter currency.
• Millennium Dollars are a private currency backed by US Treasury bills and cash investments, designed to have a constant "real" value and hence act as a hedge against inflation or deflation.
• Barter clubs or corporate barter organizations are an example of alternative currency systems.
• Crom Alternative Currency is available as a single multinational alternative currency, an alternative currency to that which is issued by the world's central banks.
• BerkShares
• Ven is a social currency used in Hub Culture, a private social network that operates a network of Pavilions which accept the currency for products and services. Ven is traded among members and is one of the most advanced alternative currencies in existence, with live market pricing derived from a basket of commodities and currencies that make up the value of Ven.
• Fourth Corner Exchange
• Ripple monetary system
• ROCS - a Robust Complementary Community Currency System
• Toronto Dollar a Robust Complementary Community Currency System
• Ithaca Hours, Ithaca, NY
• Cascadia Hour Exchange
• Category:Electronic currencies, such as Linden dollar, digital gold currency, Habbo Coins,...

Advantages

Some alternative currencies devalue rapidly (they are called Schwundgeld); this increases monetary spending. The Miracle of Wörgl is an event that showed the potential of this increased spending through the introduction of a local currency known as Freigeld. Local currencies also have the benefit that they cannot be spent abroad, and thus the money always keeps circulating locally, benefiting only the local economy. Alternative currencies are reported to work as a counterbalance for the local economy. They increase in activity if the local economy slows down, and decrease in activity if the local economy goes up.

Disadvantages

Alternative currencies as local currencies cannot be spent abroad, limiting its use.

According to professor Nikolaus Läufer, the use of local currencies such as Freigeld only increases the economy temporarily. Longer lasting use of local currency results in a decline and stabilization of the economy. This as the increased rotation speed of the money is eliminated by the decrease in the amount of money (as currencies as Freigeld reduce in value rapidly).

See also

• Barter
• Private currency
• Sectoral currency
• Bearer instrument
• Local Exchange Trading Systems (LETS)
• Time-based currency
• Flex dollar
• Local currency
• Credit money
• Money
• Private bank
• Commodity money
• Electronic money

References

• Thomas H. Greco, Jr., "Money: understanding and creating alternatives to legal tender". White River Junction, Vt: Chelsea Green Publishing, 2001.
• M. Raddon, "Community and money: men and women making change". Montreal: Black Rose Books, 2003.
• Bernard Lietaer, "The Future of Money". Random House: published January 2001.

External links

• Altruistic Economics
• Beyond Money, Thomas H. Greco, Jr.’s alternative currency blog.
• Complementary Currencies
• Community Currency Online Magazine
• Community Forge, Tools for Localisation
• Commoncy and Ecommonies, Money Futurecast
• Helger Lipmaa's links on electronic cash
• NeuMoNe (The Neutral Money Network)
• LETS Systems
• OpenMoney Project
• Revolutionary alternative currency backed up with trees The living money
• From legal tender to virtual vouchers A critical survey
• Complementary Currency Resource Center International Database of alternative, complementary and local currency systems, open library of 350+ documents, image and video center.
• Alternative, Complementary and Community Currency Systems in Asia, Africa and Latin America Complementary Currency Systems in the Third World context.