This is the last of six articles this week about how we can keep local economies afloat during the coming economic slump. There is already a scarcity of money, as the coronavirus crisis forces businesses to lay off workers, and sole traders to give up. But it will get much worse. How can we keep communities alive, and local economies trading when there’s no money around? Mutual credit can solve the problem of scarcity of money in the wake of the coronavirus. The Open Credit Network are building a mutual credit network for the UK.

Quick primer on mutual credit

Mutual credit is a means of exchange that requires no pounds, dollars or euros. There are books on the subject, and you can find complicated explanations online. However, I’ve explained mutual credit to a lot of people now, and I’ve found that a simple explanation like this usually works:

Everyone trades on account. So you get an account. When you buy something, the numbers go down in your account, and up in the account of the person you buy from. When someone buys something from you, it’s the other way round – you get credit in your account and the buyer’s account goes down. Not money, just numbers – but you can use those numbers to buy from other businesses in the network. There are limits to how far anyone can go into credit or debit.

That’s it. No money required. I’ve seen the penny drop so many times after this kind of brief, no-nonsense explanation. There’s a lot more to know, but once you get this, everything else is a bonus.

The next question is usually: ‘yes, but can it work in the real world?’. Then I tell them about Sardex, a scheme in Sardinia, started in 2009 by a group of arts graduates, after the last crash, when no-one had any money. I tell them that it’s still going strong, and currently, around 50 million euros’ worth of trade per year in Sardinia is in mutual credit – and Sardinia is a small island. There are other examples, but Sardex is a good one.

How mutual credit can help your community

Historically, mutual credit networks have often started in times of economic hardship, when there’s very little money around – during the Great Depression (the Wir system in Switzerland); during the economic collapse in Argentina in the late 90s (the ‘Creditos’ system); and in parts of the world where money is generally scarce, such as Africa (Grassroots Economics).

A mutual credit network is being developed for the UK – the Open Credit Network (OCN). Businesses can join immediately, but we envisage that eventually, businesses will join their local group, operating at the town / community level, but will be able to trade with businesses in other local groups in the UK network. There are people working internationally to allow the UK network to trade seamlessly with other schemes around the world in a global mutual credit network called the ‘Credit Commons’.

Here’s an introduction to mutual credit; and here’s another; and here’s a deeper dive into the OCN.

Mutual credit can keep your local economy trading, even during a wider economic slump. See this article for more on how mutual credit can help your community.

Calls to action

1. Register your business with the Open Credit Network directory (it’s free).
2. Have a go at trading – bring in suppliers and customers, when money is short
3. Let us know if you think you’d like to be a local convener, to help set up a mutual credit trading system for your town / community.
4. Let us know if you think you might like to volunteer for the Open Credit Network, or become part of our team (we’re also looking for software developers – especially if you know Go and/or React).
5. Help us spread the word.
   

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   About the author

   Dave Darby lived at Redfield community from 1996 to 2009. Working on development projects in Romania, he realised they saw Western countries as role models, so decided to try to bring about change in the UK instead. He founded Lowimpact.org in 2001, spent 3 years on the board of the Ecological Land Co-op and was a founder of NonCorporate.org. and the Open Credit Network.