Community Currencies

Community currencies have emerged as a means to empower the economically marginalized and to build social capital. This alternative social movement, comprised of autonomous, local systems, has proliferated in the past two decades. While all local currencies differ, each is premised on an alternative currency as a medium for the exchange of services and goods. Unlike conventional bartering (where two actors trade directly with one another), local currencies expand commerce by connecting a network of people (and often businesses). The provider of a service or good receives credit in the form of the community currency that can be used for making purchases from other participants in the system.

There are three notable systems in operation: Local Exchange Trading Systems (LETS), time banks, and hours systems. LETS (originating in British Columbia in 1983) have been the most widespread form of local currencies. Although LETS have never been widely pursued in the United States, there have been an estimated 1,500 LETS groups in 39 countries. Yet, researchers have concluded that LETS activity peaked in the mid-1990s and that a substantial proportion of LETS are no longer operating.

The Time Dollar Network was launched in 1983 in Miami, Florida, as a diverse and flexible program to formalize volunteering among the socially marginalized, that is, the young, the elderly, the poor, and the disabled. Whereas some of these programs are part of existing organizations, others are independent, alternative economies (e.g., LETS). These local currencies, now known as “time banking,”continue to expand in the United Kingdom (where there are 80 active banks and more than 25 in development) and the United States (where there are over 40 programs).

In 1991, an activist in Ithaca, New York, started Ithaca Hours, a printed local currency. This paper format makes Ithaca Hours quite different than LETS and time banks. The latter require substantial coordination and organization as every transaction is accounted for. With paper notes, neither computerized accounting system nor accountant is needed. Since Ithaca Hours was founded, 82 communities in the United States have replicated the model. However, only about 20% of these systems are currently active.

Researchers have identified several major areas of difficulty that community currencies face. They include the recruitment of dedicated administrators, the continual recruitment of participants, redundant listings and the lack of useful services available in the systems, and insufficient resources to administer the systems.

Considering the movement as a whole, it is evident that LETS and hours systems have been less successful in surviving than time banks. The success of the latter is at least partially attributable to the fact that they tend to formally employ staff to broker exchanges, and they are often based in existing organizations. Participants in time banks differ to some extent from those in LETS and hours systems too. Whereas LETS and hour systems are favored by educated, alternative, and progressive people, time banks tend to be used more by the elderly and the poor. Although all of these efforts can be considered community currencies, it is clear that there are substantial differences in the actual practices.

...