Michael Linton, in The Handbook of Domestic Exchange Systems LETSystem (see “Contemporary Origins of Mutual Credit”) Mutual credit is a system complementary to the dominant system, designed to stimulate the domestic economy in times of recession, when the banking system contracts the flow of paper money by turning off the tap by raising the rate the money. This complementary consideration is also present in the 1934 foundation (Basel). Economic ringeconomic circle (a job = economics, bell = Circle), a cooperative of small and medium-sized enterprises that began operating in Switzerland according to the principles of mutual aid when the effects of the Great Depression hit. They baptized their currency we As is customary in mutual credit, they created the equivalent of 1/1 of a paper currency, the Swiss franc.
weis an abbreviation for Economic ring. It is also the German word for the pronoun “we”. This was confirmed by one of the cooperative's founders, Werner Zimmermann we (We) also refer to mutual support of partners through mutual credit. Since then, the founding principles have undergone mutations. The cooperative maintains the basic elements, providing elements that facilitate mutual assistance among the members of the cooperative through trade we, but currently it is also a bank that offers banking products and services in the Swiss paper currency (franc). But what concerns us here is activity we Cooperative. Let's move on, though.
The vitality of a mutual credit community is enhanced when the diversity of the supply of goods and services covers a large proportion of the members' needs, thus influencing a greater circulation of the currency. Since diversity usually increases with quantity, increasing the number of members seems desirable. This leads to the issue of professionalizing the management of the system, because a voluntary worker is not enough when a society grows. Thus, Linton speculates that a system of mutual credit has become so widespread in a local area that the city council is encouraged to cooperate with it, entrusting officials with its administration. The role played by the public servant who added to the community of mutual credit I created (without knowing that it already existed in reality) in I'm tryingThe island of mental experiments at the beginning of the series (see “Trust with Money in a Complex Society”).
The mutual credit systems operating around the world are private initiatives. Many of them are born with enthusiasm and energy, but they wane over time, perhaps to the point of exhaustion. The chances of survival of a mutual credit system seem to improve if it reaches a certain size of members, a size that requires dedicated full-time professional management. The Swiss Economic Circle WIR quickly reached large numbers of members and exceeded the size that allowed it, unlike other mutual credit projects, to remain active and full, this year, its 90th anniversary. It has around 60,000 cooperative SMEs (about 16% of Swiss SMEs) which the entity classifies into six sectors: retailers, wholesalers, construction, hospitality, manufactures and services (“WIR Bank and its countercyclical effects“, s. 78).
During the Great Depression, the founding of the WIR cooperative society was part of a set of projects alternative to or complementary to the dominant monetary system that emerged around the world with the common goal of depriving money of its speculative storage function, and prioritizing its circulation. We have already talked a lot about them in the sections of the series devoted to Gesell's dwindling funds (Germany, Austria, USA) and Alberta Social Credit (Canada), which preceded the current global gains movement of the Junist movement. .
Cooperative Association Economic ringIt was one of the mutual credit projects of the time. The Swiss government allowed it to operate as a private entity if it was subject to banking laws, while it prevented some Swiss municipalities (Bell and Prinz) from launching diminutive financial initiatives such as those undertaken by the Wörgl city council in neighboring Austria. After the IIGM, the WIR cooperative gained new strength, demonstrating that its mutual credit model was not only useful in times of recession caused by disruptions to the formal system. The cooperative grew in number of members and business size during the expansion.
Since 1936 Economic ring It has Swiss bank status. However, the organization resisted calling itself by that name, and only in 1998, when it began offering products and services in Swiss francs, did it change its name to Banka we. What concerns us here is activity we For the bank, which remains a cooperative owned by its members and in which Its laws It is defined as “a mutual aid organization of commercial, artisanal and middle-class service enterprises” whose activities include “organizing WIR payments and granting and administering WIR loans and mortgages (WIR).
Loans? Mortgages? The WIR system is a form of mutual credit in which management goes beyond the management and supervisory functions that we will describe in the case of Ecoxarxes. Management assumes a banking role with a practice absent in typical mutual credit societies: creating money by extending credits in we Against borrowers' guarantees. Credits, I assure you, Without restwhich go far beyond the limits of traditional mutual credit societies (Ecoxarxes rules, for example, set positive or negative limits of 300 eco).
In typical mutual credit systems, such as Ecoxarxes, the accounts corresponding to positive accounts are negative accounts. The WIR system is a form of mutual credit brokered by the administrative bank, which is the counterparty to all members' accounts. Participants have a WIR account with a positive balance, or because they have received payments into it we Or because they received WIR credit from the bank. the we They are traded (electronically) only between members of the cooperative, who thus choose to issue additional invoices to those registered in francs. Only cooperatives that have applied for WIR credits can receive the currency we, through which credit is repaid and its products and services are sold within the WIR network. We will continue
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