Invoice Factoring as the Basis for a Digital Token Currency
This is not yet an operational system but a design proposal that I presented to the RAMICS IV conference that was convened in Rome in November 2024. The full paper can be found here and a 12 minute video description can be viewed on YouTube, or without commercials, here.
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The WIR Economic Circle Cooperative
(photo by Sergio Lub)
The WIR Bank –Founded in 1934 as the Wirtschaftsring-Genossenschaft (Economic circle cooperative) to enable small and medium sized businesses to trade independently of conventional money and banks, this business-to-business credit clearing exchange continues to thrive.
For a more complete story and additional reports and references, click here: The WIR Economic Circle Cooperative — Resources & Information.
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The Wörgl Currency and Demurrage
One of the most celebrated cases of community currency was that which occurred in the small town of Wörgl in Austria in 1932-33. In the midst of the Great Depression, the mayor of that little town took the bold step of issuing into circulation a local currency, the impact of which was heard round the world. Many journalistic accounts have been written and circulated, but few definitive descriptions have been found, and even fewer critical analyses. But, because it is so celebrated, and because it was apparently so successful, this is a case well worth studying.
I have undertaken my own critical analysis and I think this would be a good place to start.
Here are three reports from the 1934 volume of Annals of Collective Economy, plus another based on a chapter from a book written around that time.
- The Woergl Experiment With Depreciating Money
by Alex. Von Muralt - A French View of The Woergl Experiment: A New Economic Mecca
by M. Claude Bourdet - The End Results of the Woergl Experiment
by Michael Unterguggenberger, Burgomaster of Woergl - Wörgl’s Miracle – An Analysis by The German School of Monetary Freedom; From a book by Ulrich von Beckerath with an important correction by T. Megalli and comment by John Zube.
The website of Hans Eisenkolb contains a wealth of monetary reform material in both English and German with a particular emphasis on Silvio Gesell. He also has a large section on the case of the Wörgl currency, based largely upon a book by Fritz Shwarz, The Experiment in Wörgl. (1951).
The website, Geld Reform, is a monetary reform site containing mostly German language material with some material in English. It contains the entire text (in German) of the only book about the Wörgl currency I know of, that of Fritz Schwarz mentioned above, Das Experiment von Wörgl.
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Canadian Tire Money
Canadian Tire Money –The is a quintessential rebate currency. This page links to a paper from the Federal Reserve Bank of Minneapolis, A Shred of Evidence on Public Acceptance of Privately Issued Currency.
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Sardex — Sardex is a contemporary example of a successful commercial trade exchange tnat has been operating in Sardinia, Italy since 2009. The Sardex model has inspired the organization of other trade excanges elsewhere and it may be worth emulating more broadly.
From an Idea to a Scalable Working Model: Merging Economic Benefits With Social Values In Sardex. This paper which was published in the International Journal of Community Currency Research is a comprehensive report of the philosopy, developmental history, operational procedures and protocols, and insights gained by the Sardex experience. Here’s an excerpt:
WHY SARDEX SUCCEEDED
There are many useful books and online resources trying to analyse the different dimensions of the design and deployment of a local currency. However, success stories like Sardex are very rare and they all look so different that any effort to provide “best practices” from existing efforts seems futile. Nevertheless, some relevant elements can be identified. Like many other experiences in the family of “People’s Money” (Kennedy et al. 2012), Sardex provokes a strong and widespread enthusiasm when is first encountered (and of course among its members), while an awareness of how difficult it is to start such a project and reach sustainability is lacking or strongly un-derestimated.
From a practitioner’s perspective, the success of a complementary currency can be defined in the most utilitarian way as a sustained growth in the number of members and a low and decreasing percentage of member dropouts, since this implies a sustainable level of satisfaction. Success, however, also involves intangibles such as community identity, social ties, high trust levels, and solidarity between the members. Finally, success can also be found in the level of replicability of a given model in different contexts. Even if not every year in the same way and not uniformly across the circuit, Sardex has so far achieved these measures of success to a significant degree. This can be ascribed to several innovative strategies and organisational/institutional features, the main ones being (not in order of importance):
- Educating users about how to use the network and what the network aims to achieve is a never-ending task.
- Sardex has developed a very sophisticated active brokering methodology that supports the economic activity by connecting supply and demand, but also builds trust since the brokers do not get any commission from successful matches.
- The adoption of a “conservative” credit line strategy protects the circuit from free-riding behaviour and makes speculative bubbles impossible: the backing is always many times (approximately 20) the circulating currency.
- The commitment of the members to accept up to an agreed maximum number of credits (roughly 10 times the credit line) cements a certain level of commitment to the network.
- By collaborating actively with academics from multiple disciplines, Sardex remains open to fresh ideas and contributes to the academic research community. This is related also to an increasing interest in educational programmes, as well as professional communication and marketing campaigns.
- Non-convertibility to/from national fiat currency is strength and not a limitation. It helps the local economy withstand the strong credit shocks originating in the global financial markets that are transmitted to the local level by Italy’s weak position in that landscape (e.g. austerity measures).
- Network interests were built into the economic model before profit (painful short-term sacrifices provide solidity in the long run).
- The growth expectations are modest: growth is possible and desirable rather than mandatory (it’s a marathon not a 100-metre run).
- Sardex is non-partisan in terms of common political discourse, but with a clear ‘cultural project’ to develop. The founders had a clear project they wanted to implement with the goal of helping the region face the economic crisis that affected an already depressed economic context. They invented and experimented with a business model that was non-partisan and non-ideological, differentiating Sardex from many other examples, such as LETS, that are often influenced by a partisan interpretation of what a complementary currency should look like.
- Finally, geography also played a role, since the fact that Sardinia is an island strengthens the Sardinian cultural identity. In addition, Sardinia is one of a few autonomous regions in Italy with devolved powers from the national government. For some of the respondents the question of autonomy, if not quite political independence, from the national government was an important factor for their joining and supporting the initiative.
A report of my 2015 visit to Sardex, with links to other pertinent material. You can find a more recent account of Sardex in my new Chapter 15, Commercial Trade Exchanges—Their Present Limitations and Promising Future.
The Sardex factor by Edward Posnett –article from the Financial Times.
In the following video, Sardex co-founder Giuseppe Littera provides some background and history about the company.
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Beyond Money 