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Concept

Mutual credit

An exchange system where members extend each other credit denominated in a shared unit (often hours, sometimes a local currency), with no central issuer creating money. Transactions debit the buyer's account and credit the seller's; the system as a whole sums to zero. Origin in 19th-century mutualist economics; modern examples include the WIR Bank (Switzerland, 1934-), LETS (Local Exchange Trading Systems, 1983-), Sardex (Sardinia, 2010-), and dozens of business-to-business mutual-credit clearinghouses worldwide. The most-developed alternative form for business-to-business commerce without bank credit.

How mutual credit works

Members open accounts at zero balance. When member A buys $100 of goods from member B:

  • A’s account goes to -$100
  • B’s account goes to +$100

The system sums to zero — there is no money created from nothing, just credit extended within the membership. Negative balances are allowed within agreed limits; the system functions as a clearinghouse rather than a depository.

Notable systems

  • WIR Bank (Switzerland, 1934-) — the largest and oldest mutual-credit system; 60,000+ Swiss SME members; ~1.5B CHF annual turnover
  • LETS — Local Exchange Trading System; Michael Linton’s 1983 design from Comox Valley, BC; thousands of LETS networks worldwide
  • Sardex (Sardinia, 2010-) — business-to-business mutual credit; ~4,000 SMEs; €100M+ annual turnover
  • CES (Community Exchange System) — international web-based mutual-credit network

See also

Auto-generated from this entry’s typed relations: frontmatter, grouped by relation type so the editorial signal isn’t flattened.

  • Shares approach with: [[regenerative-finance]] · [[local-currency]]

Sources

  • The Future of Money, Bernard Lietaer (2001)
  • WIR Bank published materials
  • Sardex published materials

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