A time bank is a reciprocity-based work trading system in which hours are the currency. With time banking, a person with one skill set can bank and trade hours of work for equal hours of work in another skill set instead of paying or being paid for services.
The hours banked are always traded equally regardless of the services rendered. This equality is intended to foster ties in communities and, by making all contributions valued equally, encourage equality in the communities themselves.
The system of time banking has some restrictions. For example, it must avoid assigning any services or hours banked a monetary value as this would make them taxable. This restriction means that workers can’t easily offer services outside the community.
Critics also fear that time banking could distort market forces, causing economic problems. However, with the economic problems already stemming from free market economies in recent years, the system is often seen as more of a solution than a threat.
Time banking was invented in 1980 by Edgar Cahn, an American professor of Law, to address unfulfilled societal needs in the wake of cuts to social programs during the Reagan administration. Cahn said he created the system as a way to reward “decency, caring and a passion for justice.”
In this video, Cahn describes why he developed the time bank concept and how it works: