Over five thousand alternative coins are circulating the world, from Brazil to Japan and from the USA to Europe. Created to contrast the economic crisis and complementary to official currencies, they are the local, self-managed answer to private and public conventional finance bottlenecks which advantageously connect the wealth produced locally to the territory. Another type of circular economy, you could say, coming full circle on the value chain which is still anchored to the place of production. 

The USA’s most known case is the Ithaca Hour, launched in 1991, in the town of the same name hit by a serious economic depression after a factory closing. Merchants promoting the initiative began paying suppliers with the banknote worth 10 dollars (the hourly labour rate at the time). By the end of the nineties, the Ithaka Hour was already being used by hundreds of companies and consumers. 

In Brazil, faced with the great devaluation of the real, at the beginning of the nineties, the mayor of Campina do Monte Alegre decided to issue the Campino Real to be spent exclusively within the municipality, contributing to the local economy’s relaunch. While, in Argentina, devastated by the bank crash and the devaluation of peso, in 2002, over 200 complementary coins in circulation helped more than five million citizens to survive the crisis. 

However, the WIR (German for “us,” the Swiss network launched in 1934 by 16 members in answer to the 1929 crisis, is the longest-lasting local coin. The WIR cannot be bought or converted into Swiss Francs, nor can it be printed. It is more a unit of measure that governs credits granted to companies as well as purchases and sales of goods and services amongst more than 45,000 SMEs which are part of the network. In 2015, the transaction value exceeded a billion and a half Swiss Francs. Volker Strohm, in charge of communications at WIR, explained what was behind its success: “We are a national player. The principle which this experience based on, that locally-produced money and wealth must stay in the territory, above all to benefit SMEs, is still current. Even more so today when cash flows are increasingly heading overseas and the financial crisis has taken away resources for investments.” Since 2000, WIR has also become a cooperative bank to full effect operating with Swiss Francs – “a decision made to satisfy the need of some partner companies to make use of loans in Francs for investments on the conventional market,” specifies Strohm. This step thus allowed for unifying the two financial channels, the one in WIR and the one in Francs, under the same roof. “In the future, I believe that the role of complementary currencies will take two directions. On one hand, there’s bitcoin (international electronic currency, editor’s note), which is expanding but which, I think, has risks. On the other are complementary currencies connected to local productive community development. They both tell us that we are changing how we consider traditional money,” concluded Strohm.

In this lively context, an Italian initiative is holding court on the pages of newspapers like the Financial Times and is being studied at the outstanding London School of Economics. Even the WHO is taking an interest in the Sardex. For the past six years, all kinds of goods and services are bought and sold within this Made-in-Sardinia commercial credit network, using Sardex credits (conventionally, one Sardex is worth a euro). “Before buying something, I think about how I can spend my credits within the network,” Manuela Statzu, freelance in the construction sector with a bent for green building, tells on the blog Sardex.net. And so, fromrent, to furnishings, to groceries in a specialist organic store, to clothing, to lingerie, to beauty centres, to cat food, holidays, Christmas hampers for customers, company meetings and lunches, she buys everything within the network and pays with credits which she collects by selling her services to other members on the network. “Apart from fuel, I rarely use the euro any more,” she concludes. 

According to Carlo Mancosu, one of the five young, enterprising founders of this innovative alternative economy, which at June 2016 already totaled more than 3,500 members including professionals, one-person companies, SMEs and large companies (for example, Tiscali) and third-sector associations, the Sardex idea originates from Pierre-Joseph Proudhon’s idea of a people’s bank, the WIR experience, but, above all, the Proposal for an International Clearing Union formulated at Bretton Woods, unsuccessfully, by John Maynard Keynes. Since 2010, its start-up year, 140 million Sardex credits (+1.059% in 2015 compared to 2012) have been transferred in 300,000 operations. This boom spread across Italy like wildfire with eleven regional networks connected to the Sardex (see box). “Keynes highlighted that treating the debtor and the creditor in the same way creates a convergent, balancing push towards zero,” explains Mancosu. “We have applied this concept within the network, first of all, by eliminating active and passive interest. Through the Sardex, we have realised a mutual credit network as an antidote to the credit crunch, which is particularly hard on SMEs.” 

Basically, the system allows you to buy what you need in Sardex (possibly using an initial loan with zero interest), and offer your goods and services in exchange on the network. In this way, the network is an additional market to the traditional one and a chance to increase one’s clientele. And thanks to the trusting connections established, the community is perceived as such and anchors the economic wealth produced in loco to the territory, becoming social wealth. 


The big Sardex family

11 regional networks participate in the Sardex: in Piedmont there is Piemex, in Lombardy Circuitolinx, in Veneto Venetex, in Emilia-Romagna Liberex, in Umbria Umbrex, in the Marche Merchex, in Abruzzo Abrex, in Lazio Tibex, in Molise Samex, and in Campania Felix. 

Employees and collaborators total around 200 people. Overall, the Sardex included, there are over 7,000 Italian company/freelance members. There are 10,000 open accounts, also held by company employees. It is estimated that, in 2016, commercial credit networks will develop trade operations between local companies for a value of over 100 million euros, of which 70 in the Sardex.

Liberex’s growth is particularly significant. Launched in 2015, in October of this year it already totalled around 180 companies and more than 200 employee members, while it had transferred over one and a half million euro/Liberex. What is advantageous about being on the network? There are the same benefits as the Sardex, of course: “At the beginning, you have a loan in Liberex with zero interests. You acquire turnover through the community and spend without euros, which you would have to borrow from a bank paying interests,” revealed Paola Piras, head of communications. Who is in the Liberex community? “Big and small companies, like Achanto and organic supermarket chain NaturaSì, lawyers, accountants, labour consultants, dentists.” There is even a restaurant, where you can pay for your bowl of pasta with the Liberex.


“With the Sardex system, everything is traced and invoiced. From a legal and tax point of view, this complementary currency is above all suspicion in terms of evasion and counterfeiting. The fact that the credit value is valued when used to buy goods and services encourages holders to spend it as soon as possible. This is confirmed by the Sardex’s circulation speed at 12.34 against the euro’s 1.5. Rather than a currency in the strict sense, the Sardex acts as a unit of account for measuring the transactions within the commercial credit network. It is no coincidence that, like the WIR, it is not printed, it cannot be purchased for an amount corresponding to the euro, and it is not convertible (protecting it from speculation). Unlike local complementary currencies, like the Bristol Pound, adopted by the British city of the same name, or the Brixton Pound, whose banknotes sport the impression of the transgressive David Bowie’s face and circulate in the London neighbourhood. A network of shops and businesses where consumers can make purchases has developed around these English currencies, which are bought in designated places in exchange for sterling. In this way, the countervalue corresponding to volumes of purchases made remains in the area.

Returning to the Sardex, in order to access the network, you must pass a careful selection process which aims to accept those with market spaces on the network, both for buying useful goods and services, and for selling their own products. So, the network grows based on internal development needs and members are allowed to participate in relation to the foreseeable demand and supply flow which they can benefit from by being part of the community. In other words, the aim is to avoid reproducing the conventional market’s issues with an excess of the same supply which would make the internal competition explode. Today, there are a thousand companies in stand-by waiting to trade in the Sardex. 

And how are management costs covered (only in Sardinia, the structure employs 80 people)? “Members are asked to pay a one-off membership fee, as well as an annual fee which is in proportion to their economic ‘size’: from a membership fee of 100 euros plus the same as an annual fee, to 1,000 euros for access plus 2,500 annually for bigger companies,” answers Mancosu. 

Plans are being made to extend the network to individual end consumers with the area B2C and possibly to quote it on the stock exchange. As regards overseas, Mancuso adds: “We have received requests from all over the world, from South America to North America, from Africa to Europe, and the adventure will probably begin right in the Old Continent, where we know the regulations in force.” 

As regards local networks, “they have to develop regional markets of reference so as to avoid, for example, bottles of mineral water from travelling the length and breadth of the country.” There is no need for studies on the network’s carbon footprint to conclude that it also works in terms of environmental sustainability, since goods’ transportation is confined to regional borders thus reducing the kilometres travelled on the road.

Who would have said that, after being unsuccessful at Bretton Woods, Keynes would have been relaunched in Sardinia?



Liberex, www.circuitoliberex.net

Sardex www.sardex.net/?lang=en#

Top image: ©WikiCommons/Photo by Enlil Ninlil2



Interview with Tonino Perna, professor of Economic Sociology at the University of Messina

Edited by S. Z.


“We have got to take back monetary sovereignty”


Professor of Economic Sociology at the University of Messina, Tonino Perna is author of the volume Monete locali e moneta globale. La rivoluzione monetaria del XXI secolo (Altreconomia, 2014), examining the changing meaning and form of money, over the centuries, until the diffusion, today, of complementary currencies and the decline of the dollar as the currency regulating international market exchanges. We interviewed him. 


You write that, along with ethical purchase groups and zero-kilometre markets, local complementary currencies form part of a deglobalisation process from the foundations of finance and represent one of the most important phenomena of our time connected to the demand for an alternative economy which is ecologic, ethical and capable of giving people’s needs and rights priority again. 

“The public, consumers and local government promoting local currencies need to take back part of the monetary sovereignty which we have lost. The debt situation of some municipalities, throughout the world, has led to a reduction in services and an increase in local taxes. Let us take, for example, the municipality of Rome which has a debt of 12 billion euros, along with all its other problems ranging from the environment, to waste collection and the endless maintenance of public property. Having a sum of local complementary money available to keep the territory’s economy on its feet and to provide for all these needs would be a good thing. Of course, it would not have to be a new invention since before the arrival of the Mint, Italian municipalities could make local coins for trading in the territory, while the national currency was used for the rest of economic transactions.”


Local Exchange Trading Systems are another type of complementary currency. Can they be identified as a time bank?

“Yes, they are more or less the same thing. It is a matter of exchanging services or goods, like used clothing, which is no longer being used. It is a modern return to bartering with the advantage of creating an ethical network. Digital technologies have allowed for this relaunch. However, this is not a resolutive option, since it only involves the middle classes and exchanges are limited.”


How do you rate local commercial credit networks, like the WIR and Sardex?

“The advantages are clear. First of all, they offer the chance to access credit. For example, with the Sardex system, considering how impossible it is for some companies to get bank loans, there are no interests or banking intermediation costs. And, lastly, they create a trusting environment which is the founding adhesive forming the base of how these networks work: a trusting network is established between entrepreneurs and between consumers and entrepreneurs, where money becomes an intermediary, an instrument used for trading, which is not accumulable and must be spent within the community. Instead, when money is an end in itself, it becomes an instrument of power, as we have seen.”


What do you think about the local currencies in consumer pockets, like the Bristol Pound?

“These are important experiences. In Calabria, six municipalities print complementary currencies. The most famous is the Riace, introduced in the municipality of the same name of 1,700 inhabitants by mayor Domenico Lucano (the only Italian included by the magazine Fortune among the 50 most influential leaders in the world, editor’s note). Faced with the arrival of over 400 refugees and the need to cover the immediate costs of board, lodgings and welfare due to the greatly delayed arrival of public contributions, the mayor invented the Riace to be distributed to the immigrants, who can spend them on what they need in the town’s shops. This solution has benefited local trade and craftsmanship as well as the refugees’ integration process into the local economy and community. Unfortunately, Banca d’Italia, having lost its historic function due to the euro’s adoption, rather than taking care of controlling banks, intends to hinder those printing the currency which is nothing more than a payment promise, a sort of voucher. It does not completely replace the euro which immigrants will need to buy, for example, a phone card.” 


Do you agree with the negative opinions about bitcoin?

“The bitcoin is talked about because it has been involved in some cases of drug trafficking. Since it is an virtual international currency, it has nothing to do with local complementary currencies. To use it you need to be part of the society managing it. It was initially very successful but its value has suffered significant fluctuations and I think this has a lot to do with speculation.”


You write that the dollar, above all, due to the push of the BRICS, will lose its role as global currency of reference for international trade. What do you see in the future for local complementary currencies?

“If austerity policies do not change, if we do not loosen our grip on municipal financial statements which have been seriously hit by the current crisis, the necessity rather than the desire to try different ways will prevail. If they are doing it in England in somewhat well-off cities, like Bristol, it means that municipalities there are also suffering due to the crisis. That is why, I believe that local currencies will further expand there, possibly, as is already happening in several Brazilian cities, for example, in connection with local environmental protection. They will still be complementary: their role is to rebalance the market, favour income distribution, environmental protection, relations between the city and the countryside and between inland and coastal areas, not to replace official currencies completely. In this sense they are a part of a journey where people take back money as an instrument. It is difficult to foresee how far this phenomenon will spread across the world. Experiments underway, some with decades of activity under their belt, like the WIR case, are concrete proof of their feasibility. I believe, in particular, that the experiences involving local government in the front line will have a future, like the recent case of the mayor of Barcelona, Ada Colau, who launched the local currency project, named the Virtula. And in Italy, it is beyond belief just how many mayors have telephoned me over the past years because they would like to try out route. But they seem to get scared off at the start line – because, compared to money, there’s a sort of taboo, a refusal to become interested in the easiest aspects of finance. We have a psychological subjection with the banks, in particular when we want to ask for a loan. Forgetting that banks exist because they lend money.”