A mutual credit network is a pool of businesses, traders or individuals that sell or seek goods and services within that internal market. The network issues its own “money” and the members use it to trade with each other. If you sell within the market you gain credit to spend with other members; if you buy, you owe a debt to the market until someone needs your product. Mutual Credit in fact, allows you to trade without conventional money. It solves cash flow problems without seeking a cash injection. Many models do not charge per transaction, so unlike a bank there are no fees, no overdraft charges and no chance your loan application will be turned down.
A membership fee is likely to apply. The structure has to be administrated and governed, but much of it could be automated and there is no reason why it can’t be done equitably like the Open Credit Network; a UK mutual credit co-operative attempting to build a critical mass of members before meaningful trading can begin. In Switzerland, the mutual credit cooperative WIR has been in existence since the great depression of the 1930s and currently has around a quarter of all Swiss businesses as its members. It has been shown to have a stabilising effect on the economy as a whole, with the use of mutual credit increasing during periods of economic crisis. A more local and recent example is Sardex, a mutual credit network in Sardinia (albeit a private sector organisation). It has grown to include over 4000 members (including one of significant size, Tiscali) and a ‘turnover’ of over 40 million Euros last year.