Mutual credit: introduction

“It only requires that we each take control of our own credit and give it to those individuals and businesses that merit it and withhold it from those that do not.” – Thomas Greco

What is mutual credit?

It’s a means of trading, of exchange, that doesn’t require conventional money, doesn’t incur interest and doesn’t involve banks. It’s based on networks of businesses / traders, who get to know and trust each other in a geographical area or a business sector, and, in effect, give each other interest-free credit, when they purchase goods and services from each other.

Each business gets an account. They go into a directory so businesses can find suppliers and customers. When a purchase is made, the buyer’s account goes into debit, and the seller’s account goes into the same amount of credit. There’s a limit to how far you can go into credit or debit – and that’s basically it.


There was never a society in which the main means of exchange was barter, and money didn’t evolve from barter, but from mutual exchange within communities, where the vast majority of exchanges took place. Barter was always marginal and between strangers.

Mutual credit is not barter. You don’t have to find someone who has what you want and wants what you have – you just get credit or debit in your account. It’s not a swap. You can then use your credits to trade with anyone else in the network.

There are similarities with local currencies. The main differences (as outlined by Tom Greco) are:

  1. Mutual credit involves a trusted network of traders; local currencies don’t.
  2. Local currencies are bought and redeemed for conventional, bank-issued money; mutual credit can’t be bought with conventional money.
  3. Local currencies can still be hoarded and made scarce; mutual credit can’t – it’s just a means of exchange.

This medieval tale shows how self-issued credit works in a local community. Each trader’s credit has the traders’ name on it, and the risk is theirs alone. In mutual credit, the risks are mutually held, which means that mutual credit schemes require governance. Unlike medieval market traders, we now have the advantage of the internet to organise it.


Mutual credit has a fine pedigree. Pre-money, villagers everywhere traded with each other in credit – you help fix my roof, I give you meat when I kill an animal; you help me harvest my crop, I help you bring in firewood – and so on. The accounting was done informally, in people’s heads, and no money changed hands.

In the 19th century, William Greene, Lysander Spooner and Pierre-Joseph Proudhon championed mutual credit and mutual banking in the US.

During the 1930s depression, various scrip currencies were used, and the mutual credit Wir Bank was born in Switzerland.


A street ad for the Sardex mutual credit system in Sardinia.

After the Second World War, at the Bretton Woods conference, John Maynard Keynes proposed a mutual credit scheme between nations – the International Clearing Union – but it was rejected.

The large-scale, for-profit barter industry (actually mutual credit) has developed since the War, overseen by the International Reciprocal Trade Association (IRTA), comprising 400,000 businesses and trades valued at $14 billion in 2019.

LETS and time banks are community-based, non-commercial exchanges in which local people exchange favours and hours of work.

Interview with Thomas Greco: the future of money is mutual credit (not Bitcoin).

On the island of Sardinia in the Mediterranean, a group of arts graduates launched a mutual credit scheme called Sardex in 2009 – after the financial crash when money was very scarce. However, skills, tools and infrastructure were the same as before the crash, and so Sardex allowed businesses to trade without money. There are now 4000 businesses involved, with trades approaching 50 million euros per year. Here’s an FT article with more information about Sardex.

Grassroots Economics are building mutual credit networks in poor areas of cities in eastern and southern Africa.

Now, the Open Credit Network and associated networks are building a co-operative UK network and a global ‘Credit Commons’ – see below.

The Open Credit Network is a UK-wide mutual credit network that will involve many local schemes, and will itself plug into the global ‘Credit Commons’.

What are the benefits of mutual credit?

For businesses

  • Mutual credit provides a parallel purchasing / accounting system that means businesses don’t have to rely entirely on sterling. This insures them against sterling cashflow problems and wider economic downturns.
  • Networks of businesses give each other interest-free credit (credit is difficult for small businesses to obtain from banks, and expensive via credit cards).
  • The network provides new leads / customers for members.
  • Businesses can pay suppliers without money, and customers can buy from them even if they have no money.
  • Allows businesses to sell surplus stock / spare capacity.

For communities

  • Unlike conventional money, mutual credit is not an exchange medium that can be sucked out of communities and accumulated in tax havens.
  • Builds trusted networks of businesses, which can improve and increase community connections, interactions and trust.
  • A community with a strong mutual credit network will have more protection against wider economic crashes.

Grassroots economics have introduced voucher schemes into poor areas of Kenya. The vouchers don’t have to be bought with official currency – they are just to facilitate trade locally in a membership scheme, and in fact represent a mutual credit system.

Wider benefits

  • Conventional money is scarce; mutual credit is not – it’s available to any network members who want to trade with each other. To paraphrase Alan Watts: to say that it’s not possible to trade because of a lack of money is like saying that it’s not possible to build a house because of a lack of centimetres.
  • This means that mutual credit enables trade in areas of extreme poverty.
  • Mutual credit is a means of exchange, but not a store of value – it can’t be accumulated and hoarded by wealthy individuals.
  • Because there’s no interest to be paid, and no impetus to hoard, there is no ‘growth imperative’ that causes overconsumption and damages nature.
  • Provides a refreshing alternative to debt-issued, bank-controlled money.
  • In a well-run mutual credit system, inflation can’t happen.
  • Mutual credit has no divisive ideology attached. It’s just a practical tool that has multiple benefits, whatever your political position.
  • It doesn’t require any mining – of precious metals or of digital coins.

There’s a lively mutual credit scene in Australia, where they have developed their own Australian Community Exchange System network.

What can I do?

2018 saw the launch of the Open Credit Network (OCN) – a mutual credit network for the UK. The OCN is a co-operative of its members, and has built free / open source software that anyone can use to set up a mutual credit network.

Join the Open Credit Network (OCN) here. You can add your business to the free directory, become a trading member, find new customers and suppliers, and trade in conventional money, mutual credit or in a mixture of both. Credits are expressed in pounds sterling, for ease of expressing value – although credits can’t be bought and sold for conventional money.

Introduction to the Open Credit Network.

Here’s an FAQ for more information about the OCN, and here’s the Membership Agreement for trading members. Members will conduct a relatively small proportion of their business in mutual credit at first, so that they still have enough conventional money for cash-only purchases and taxes.

Currently, the OCN is open to UK-based businesses. Individuals / sole traders can join too, but without the credit facility. This may change in future.

The OCN will build a parallel exchange system to the current ‘hard currency’ economy. It will be based on local ‘nodes’ that can trade freely with businesses in other nodes within a wider UK network, which will itself be situated within a global ‘Credit Commons’ that will include any existing mutual credit network anywhere in the world, in a new, global trading system. The bigger the network, the more useful it becomes.


You can develop new skills to provide products or services for a willing group of local customers, and maybe turn that hobby into a career.

If you’d like to be involved, there are various things that you can do:

Thanks to the Open Credit Network for information.

The specialist(s) below will respond to queries on this topic. Please comment in the box at the bottom of the page.

Matthew Slater develops software for complementary currencies. He co-founded Community Forge, which free hosts software for collaborative credit schemes; he co-authored the Money & Society MOOC, a free masters level multidisciplinary online course. He co-drafted the Credit Commons white paper, a proposal for a global solidarity economy money system, based on mutual credit principles.

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