Complementary Currencies/BoK EN - Time Banking

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).

Purpose

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.