2 ♣ · Coordination · Draft
Mutual Credit
A shared ledger where members pay each other by going into debit, so trade itself creates the credit.
How it works
Every member starts with a balance of zero. When one member buys from another, the buyer's balance goes down and the seller's goes up by the same amount. The sum of all balances is always zero, so no outside money is needed. Each member has a credit limit that caps how far negative they can go. A member with a negative balance clears it by selling goods or services to other members. Trust in the group, not collateral, backs each unit.
Use it when
- You want members to trade with each other without needing cash or tokens.
- Keep value circulating inside a community instead of leaking out to outside currency.
- Pay for work now and let the worker settle later by contributing back.
Watch out for
- Members who run up a negative balance and then leave stick the group with the loss.
- The ledger only works while enough members accept the credit as payment.
Example
Sardex. Sardex has run a mutual credit network for businesses in Sardinia since 2010, clearing tens of millions of euros of trade each year without bank loans.