Complementary/Community currencies (CCs) are all currencies that are not legal tender and as such, circulate as supplements to ordinary money. CCs can either be valued and exchanged in relation to ordinary money, or form their own unit of account and pricing mechanisms. They are issued and managed in not-for-profit manner and exist across the globe in networks limited by geography, sector or shared values.

CCs are nothing new and in a broad sense predate today’s mainstream monetary regimes. In modern times there are many examples of CCs being developed to meet specific needs at local and regional level, or to mitigate the lack of supply of legal tender in times of crisis. Increasingly they have also been used as a tool to achieve policy objectives.

Despite exact figures being hard to calculate it is safe to assume that the number of CCs in operation across the globe today is between 3000-5000. The growth in number has been particularly high since the 2008 financial crash.

CCs of all sizes are capable of providing significant benefits to businesses. Some CCs have a considerable impact on the economy such as the WIR Bank which has been in operation for 80 years and records transactions worth billions of Swiss Franc equivalent every year from its 70,000 active SME business members. Most other CCs are considerably smaller, operating often with a few hundred members within a geographic area or specific business sector.

Under the umbrella of CCs there is a huge variety of examples worldwide that fit, to varying degrees, under the following labels:

Despite labels often being used to refer to particular CCs, in practice every existing currency system is unique.

Most businesses do not operate at 100% of their potential business capacity. Focussing on different operational aspects of running a small to medium sized enterprise, there are a range of CCs designed to help businesses improve productivity and become more resilient to externalities that might affect their prosperity. For example:

Increasing sales

    • B2B Currencies: these exchange networks publicise participating businesses to the rest of the network, opening up each business to a new set of customers. Companies can generate incremental sales from the demand of the buyers looking for trade opportunities from within the network.
    • Local Currencies: local currencies can only be spent within the network of accepting businesses. Consumers may seek out participating businesses and overtime develop a loyalty around the shared values represented by the currency
    • Loyalty Schemes: by rewarding loyal customers with ‘points’ there is evidence that customers will spend more there over time

Improving cash flow

    • B2B Currencies: members of trade exchanges can make purchases and sales within a network using ‘trade credits’ or ‘points’ and can therefore direct more of their legal tender cash flow towards operational costs
    • Local Currencies: businesses can use the local currency for transactions that would have required legal tender
    • Closed Loop Payment Systems: these currencies can provide interest free credit options

Using spare capacity

    • B2B Currencies: trade exchanges connects underused assets and business capacity with unmet needs
    • Loyalty Schemes: underused assets or capacity can be exchanged at a low marginal cost to loyal customers for points

Creating a network of businesses

    • B2B Currencies: businesses make long term relationships and commitments to other businesses in the same area or sector and recognise an ethical dimension to the trade that they perform and as well as their obligations to and reliance on other fellow members

Although businesses can start their own currency most choose to support or get involved with existing initiatives. There are a number of ways in which SME businesses can support a currency and reap the benefits:

  • finance all or part of a CC’s implementation and/or ongoing running costs
  • provide for all of part of a CCs operational needs
  • take a position in decision making body
  • provide facilities (IT, space, materials)
  • promote the CC (PR, communications)
  • use the CC to procure goods and services

Those implementing and participating in CC schemes need to comply with the laws in the country where they operate. There are a number of areas that need to be considered in relation to both the currency model and the way in which it is implemented. Some areas to consider for SME businesses wanting to engage in CCs:

  • Taxation – VAT, corporation tax and income tax
    • How will the acceptance of the CC affect the accounting practices of the business?
  • Labour Law – impact on social security, unemployment and disability benefits, employment terms
    • Are there consequences for employees in receipt of benefits receiving a CC as part of their wage?
  • Acceptance of CCs by public bodies
    • Do public bodies accept the CC in exchange for taxes or services?

In all reputable projects the organisers of the currency will provide the legal and compliance guidance needed for participating businesses.

Currencies that aim to engage SMEs are usually denominated at par with the national currencies. As such the CC income is taxable and so accounting for them is no extra trouble. Countries do however vary in how much or little different CC models are implicated by national laws. In some locations currencies backed by legal tender might be handled differently from a “trade credit” currency. For example in the USA special tax forms are required to declare income from trade credit transactions, and there is a dedicated body set up to advise on this: International Reciprocal Trade Association (

The legal and compliance issues relevant for CCs is another area for which CCIA will provide overview guidance for practitioners and regulators. Sign up for the CCIA newsletter to be notified of publication and read more here.