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What Is Complementary Currency?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 09 August 2014
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Complementary currency is a type of currency that can be utilized alongside another currency, with that usage normally limited to certain geographical locations. Typically, this type of currency may be used in conjunction with and be converted into a national currency that is native to the region under consideration. The purpose of the complementary currency is not to usurp or replace the use of a national currency, but to be used as a tool in promoting local economic growth or to otherwise benefit some function or activity within that local area. Examples of this type of currency can be found in many nations around the world.

Unlike a primary or national currency, a complementary currency is not intended for trade in a foreign exchange market and is usually not used as a means of payment for goods and services outside a narrowly defined area. Considered a type of local currency, there is no danger of replacing the national currency since the local currency is not accepted outside that limited area. Even then, it is usually for only certain types of purchases. Outside that local area, the currency has no standing as legal tender and would be considered worthless in a different setting.

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The purpose of complementary currency is usually to provide a means of enhancing some aspect of trade or quality of life within a specific geographical location. This type of currency can be used for certain types of purchases such as the acquisition of goods for use in improving a road system, installing a water filtration system for a community, or even for buying goods offered by locally based businesses. The approach is sometimes used to strengthen the local economy or in some way enhance the economic and environmental qualities of the area.

A number of examples of complementary currency are found around the world. In Canada, the Toronto and the Calgary dollar are used locally alongside the national Canadian dollar. The Brixton pound is also used locally as well as the British pound. KW Cash is a form of complementary currency that is accepted in certain communities within the state of Pennsylvania in the United States. There are also examples of this type of currency in use in parts of Spain, France, and a number of other nations in Europe as well as Africa. While most of these alternative local currencies are structured as a type of local exchange system, complementary currency may also be structured as part of a voucher system.

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