Complementary Currencies/BoK EN - Time Banking

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General Description

Time Banks are bookkeeping systems using a complementary currency (service credit) for rewarding ‘voluntary’ work that contributes to community building and the social economy. In the words of Gill Seyfang (2002:4): “Time Banks are a type of community currency which turn unpaid time into a valuable commodity, and aim to build social capital and promote community self-help through mutual volunteering (both giving and receiving help in exchange for time credits)”. As opposed to an ordinary volunteering agency, volunteers are rewarded for their contribution in a Time Bank with time credit upon which they can receive ‘voluntary’ work themselves. This voluntary work usually includes social services like education, babysitting, healthcare, computer tuition, gardening, Do It Yourself (DIY), do the shopping and so forth. Time Banks as a rule attract socially excluded groups of people (mostly the unemployed, the poor, the retired, the elderly, the disabled), volunteers, and those dependent upon receiving services (e.g. the elderly and the disabled) (Seyfang 2004a: 244).


Although Time Banking is a mutual credit scheme just as LETS and Barter, there are some noticeable differences. Just like LETS, Time Banking is intended for ordinary people, and it exists on a not for profit basis, rather than commercial barters, which are intended for businesses to increase profits. However, unlike LETS, Time Banking concentrates on strengthening social rather than economic linkages (Seyfang 2002: 2). LETS have a more businesslike character as it involves commercial transaction and negotiation on the price for goods and services between consumers. LETS are more suitable for strengthening the formal economy. Time Banks are designed to provide for social services (rather than goods) that the conventional economy cannot deliver. The aim of time banks is to resolve a deficit in the provision of certain social services that are (often) not valued in the conventional money economy. The Time Bank’s goal is to increase activity in the informal sector of the economy, and to strengthen social cohesion in the community.

Design Criteria

Support Medium

Time Banking is essentially the running of a bookkeeping system just as Barter or LETS. Today, this usually takes place on a computer. Hence, electronic money is the most common form in Time Banks.

Function (medium of exchange, store of value, standard of value)

The primary function of time credits is to facilitate exchange of services. As is the case with barter and LETS neither interest, nor a demurrage is in place with Time Banking.

Time Banking makes self-evidently use of ‘hours’ as a unit of account rather than trade credits in LETS or Barter. In Time Banking 1 credit is always worth one hour of work. ‘Hours’ are a convenient standard of value, as time banks are intended for exchanging services rather than goods. Time Banking has a strong egalitarian and social character as one hour of work is always worth one time credit (irrespective of the work performed) (Seyfang 2002: 4;8).

Ithaca Hours, a Time Banks initiative in the state of New York, is an exception, as we will see in the next section. Ithaca hours are denominated in ‘hours’ but in addition stating that 1 time credit represents 10 dollar (the average salary for one hour of work). This allows Ithaca hours to be used for exchanging goods as well.

Issuing Procedure

Time credits emerge when two persons initiate a transaction; that is when one person provides a service to another person. All participants in a Time Bank start with an account balance of zero. By providing a service, the account of the receiver is debited with the corresponding amount of hours and the account of the provider is credited by the same amount. That means that all time credits in a Time Bank always add up to zero. Having a negative balance obliges you to deliver services to anyone else in the Time Bank community. Those having earned hours, can on their turn spend these to receive help from others, save them for a ‘rainy day’ or as pension. They also have the possibility to donate their hours to someone else if they feel they do not need help themselves. In time banking, the time credit is currency that is not backed by any good or service, and cannot be redeemed for either of them at the organization. Hours can also not be redeemed for ordinary money.

Ithaca Hours, is once again an exception. Ithaca Hours are fiat money and are issued through spreading them by newspaper. Ithaca hours are created out of nothing. Although 1 Ithaca Hour represents 10 dollar, it cannot be redeemed for dollars.

Funding and Cost Recuperation

Most Time Banks rely solely on external funding for operating the Time Bank. In addition, in the UK Time Banks are often (financially) stimulated and funded externally including local authorities (Seyfang 2002: 2;5;8). Time Banks are overall considered to be very useful means of providing social services to the public, where governments cannot provide them. It are usually local authorities or professional organizations (e.g. schools, health care agencies) that lay the foundation for- or support Time Banks rather than volunteering non-professional individuals as in the case of LETS. Time Banks are therefore characterized by a top-down rather than bottom up approach and a more professional image.

Implementation and Origin

Time Banking was invented by Edgar S. Cahn in 1986 when applying his concept of Time Dollars to social projects (education, healthcare) in Washington D.C. and later Florida and Chicago. Cahn’s objective was to address the inadequacy of the government to provide sufficient social services and to deal with social problems existing in Washington D.C (Greco 2001: 98). This inadequacy was the result of cuts in government spending on social welfare. Confronted with a lack of money for delivering social services, Cahn suggested developing a new currency to pay for the social services that needed to be provided. Soon, many more similar initiatives emerged.

Worth mentioning in this regard is a very famous and successful project that often is associated with Time Banking: Ithaca Hours in the state of New York. Paul Glover launched the project in 1991, after which it steadily grew. Ithaca is a town of approximately 28.000 people relatively isolated and characterized by a population with a relatively low income, making alternative currency interesting to most citizens. One hour represent 10 Dollar, which is by approximation one hour of work. The ‘Hours’ were issued by Glover’s newspaper Hour Town (previously Ithaca Money). When advertisers agree to accept hours in full or partial payment they initially received notes worth four ‘Hours’ (later one received only two Hours) from the newspaper. The advertisers were free to spend those ‘hours’ to anyone accepting them. The Newspaper contains all businesses and individuals that were willing to receive ‘hours’ in payment for their goods and services (Greco 2001: 96). Alternatively one could acquire Hours via a loan, through grants and as a bonus for continuing its membership in the Ithaca Hours system.

Ithaca Hours are generally reckoned among Time Banks. The name also implies this readily. But strictly speaking, Ithaca Hours are not part of the Time Banks family of currencies. Ithaca hours are after all fiat money, created out of nothing and put into circulation by an agent. An ordinary Time Bank is by definition a bookkeeping (mutual credit) system where everyone’s time contribution is recorded. The obvious disadvantage of fiat money is the risk of inflation when an oversupply of Hours occurs (Lietaer 1999: 161).

Another noteworthy Time Bank concept emerged across Japan in the 1990’s. Already in the 1950’s the Japanese experimented with complementary currencies as a means to provide social services and are actually the predecessor of Time Banks like they exist in the West (Lietaer & Hallsmith 2006: 8). One of the largest Time Bank systems in Japan is Fureai Kippu (also Hureai Kippu). Fureai Kippu (the caring relationships ticket) has many similarities with Cahn’s Elderplan as it emerged in Washington D.C. ‘Volunteers’ receive time credits for care provided to anyone in the system in need of it. Different tasks have different rewards, where some tasks deliver more than one time credit for one hour of work. In 1995, the Sawayaka Welfare Foundation started to experiment with Fureai Kippu as a social mutual credit scheme. It was invented to address the problem of a rapidly ageing population and the provision of care for the elderly it necessitated. The Sawayaka Welfare Foundation was established by Tsutomo Hotta, a former Attorney General and Minister of Justice (Lietaer 2004: 4) Several hundred non-profit organizations followed his example (Lietaer 1999: 27). These exist complementary to the national government’s health care system. Complementary because you can only receive ‘hours’ for services that are not provided by the national health care insurance.

Self-evidently similar mutual credit systems or concepts can be designed, or already have been, for satisfying other social needs such as childcare (Care Miles) or education (Saber).

Impact and Significance

Size and Growth

After Cahn introduced the concept in the mid 1980’s, Time Banking rapidly spread to other parts of the United States after which it was adopted in mostly Anglophone countries in the world. By 2000 there were already 300 Time Banks worldwide (Lietaer 1999: 158). The UK had approximately 29 Time banks in 2002 (Seyfang 2002: 5). Especially Japan has witnessed an explosion of Time Bank initiatives since the second half of the 1990’s. It is estimated that by May 2003, Japan alone had already 372 Fureai Kippu- and similar systems (Lietaer 2004: 6). Although many Time Banks emerged, the number of participants in a Time Banks usually is limited to a few hundred (Seyfang 2004c: 69). The number of transactions is also very modest. According to a National Survey in the UK, Time Banks had on average 61 members, with each member giving or receiving 29 hours on average in 2002 (Seyfang 2002:5). Unfortunately, there’s little data available on the number of Time Banks, the number of participants, and frequency and size of transactions on the global level. Even the Fureai Kippu systems neglect logging and tracking hours and members (Lietaer 2004: 6). With regard to the Ithaca HOURs program, the number of individuals and businesses participating equaled 1500 by 2001 (Lowd 2001: Ch4).

Achievements and Impediments

Time Banking has proven to be more successful than its LETS counterpart. Participating in Time Banking has proven to be advantageous for those who primarily receive- as well as for those who primarily provide social services. Volunteers have reported growing friendship, social engagement, recognition, growing self-esteem and social inclusion. By valuing social services and their providers, which in the ordinary monetary system have no monetary value, community building is achieved. Lietaer (1999: 166) for example describes how Fureai Kippu turned out to be higher appreciated than the regular healthcare provision paid for in Yen. Through Fureai Kippu provider and receiver of care have a more personal relationship. He also argues that the Fureai Kippu system turned out to be more cost-effective than the national health care system and has witnessed a significant increase in volunteers willing to provide help (Lietaer 1999: 166).

One of the factors for the success of Time Banking in the US is its exceptional status for the IRS (internal revenue service). It has decided to consider Time Banking transactions to be free of taxation (Lietaer 1999: 158; Greco 2001: 99). Also in the UK time credits are exempt from taxation and benefit calculations (Seyfang 2002; 5). Seyfang (2002: 9; 2004b), in her study on LETS and Time Banking in the UK argues that brokering has also been significant for the success of Time Banking. As opposed to LETS, buyer and seller are actively linked to each other for a transaction to take place. The broker also identifies the abilities and needs of every participant in a Time Bank. A broker simply makes sure transactions are truly taking place. That is everyone can spend and earn time credits.

That doesn’t mean that Time Banks don’t face problems as well. People are generally hesitant to ask for help in a Time Bank, despite a broker as intermediary. Concurrently, there’s only limited range of services available (as the number of participants in a Time Banks usually not exceed a few hundred) (Seyfang 2004c: 69). So often, there’s a lack of demand and supply. In addition, a large segment of the participants (the elderly, the disabled) is unable to repay their debts. Additionally, there’s a risk for jobless and disabled to loose benefits, as participation in a Time Bank may demonstrate an ability to work (Seyfang 2004c: 69).

David Boyle (1999: 22) argues that it is relatively expensive (at least $50.000) to run a Time Bank. Because of the need of computers, constant keeping track of transactions, and brokering, Time Banking is labor intensive. The fact that Time Banks often rely on external professional organizations makes them vulnerable to unsustainable funding.

A final objection to Time Banking is raised as it actually commodifies the informal economy and social relations (Lowd 2001: Ch3). It replaces the gift economy where services are provided out of friendship or kinship. Although in practice the earning of time credits is not the direct or primary incentive to provide services, Time Banking might very well have as a consequence that people are no longer willing to volunteer in the traditional sense, but increasingly expect to receive (at least) time credits. Some argue that these kinds of ‘services’ should not be treated as they were a tradable commodity.

Nevertheless, Time Banking has proven to be relatively successful, and new variants are still emerging.


Boyle, David (1999) Funny Money. In Search of Alternative Cash. London: Harper Collins Publishers

Greco, Thomas H. Jr. (2001) Money. Understanding and Creating Alternatives to Legal Tender. White River Junction, VT: Chelsea Green Publishing.

Lietaer, Bernard A. (1999) The Future of Money: Creating New Wealth, Work and a Wiser World. Post Falls: Century Publishers.

Lietaer, Bernard A. (2004) ‘Complementary Currencies in Japan Today: History, Originality and Relevance’, International Journal of Community Currency Research, 8 (1): 1-23. [1]

Lietaer, Bernard A. & Gwendolyn Hallsmith (2006) Community Currency Guide. Global Community Initiatives. Available: [2]

Lowd, Andrew (2001) Alternative Currencies in Theory and Practice; The Ithaca Model Examined in Northern California. M.A. Thesis, Stanford University. [3] Retrieved June 16, 2010

Seyfang, Gill (2002) ‘Tackling Social Exclusion with Community Currencies; Learning from LETS to Time Banks’. International Journal of Community Currency Research, 6 (3): 1-11

Seyfang, Gill (2004a) ‘Time on Our Side. Time Banks and Active Citizenship’. IPPR New Economy, 9 (4): 242-247

Seyfang, Gill (2004b) Bartering for a Better Future. Community Currencies and Sustainable Consumption. Working paper of the Research Centre for Social and Economic Research on the Global Environment (CSERGE). Norwich: University of East Anglia press. [4]

Seyfang, Gill (2004c) ‘Time Banks: Rewarding Community Self-help in the Innercity?, Community Development Journal, 39 (1): 62-71