Mutual Credit-Based Financing

Discussion

Michelle Grant:

"A new Land Commons would utilise a mutual credit mechanism (a collaborative credit accounting framework) (Slater and Jenkin, 2016; Fleischman et al., 2020), to buy parcels of land without accruing debt by selling inflation-proof vouchers (Mutual Credit Services, no date) denominated in land area, at a discount to investors.

Inalienable, with strong asset locks, the land would be under Land Commons stewardship and rented to tenants (also Commoners), who would pay for rights to use the land in a way that supports and expands the vision of the Commons. Vouchers could be sold by investors, including to tenants, to realise a return on investment (Darby, 2023; Green, 2023)."

(https://cms.lowimpact.org/wp-content/uploads/CommonsAgroecology_Report.pdf)

Examples

"According to the International Reciprocal Trade Association, around $12-14 billion worth of trade happens annually via mutual credit between participating businesses in the (mis-named) commercial barter industry.

4000 businesses on the island of Sardinia are members of a mutual credit network called Sardex, trading over 50 million euros’ worth of value per year. Grassroots Economics are building similar networks of pooled vouchers around Kenya. They currently have over 80,000 participating small businesses, with thousands joining each week.

Island Power are using the use-credit obligations concept to build renewable energy infrastructure for Pacific islands – but it’s also the basic idea behind air miles and community-supported agriculture."

(https://www.lowimpact.org/categories/commons-economy)

More information

Fleischman, T., Dini, P. and Littera, G. (2020) ‘Liquidity-Saving through Obligation-Clearing and Mutual Credit: An Effective Monetary Innovation for SMEs in Times of Crisis’, Journal of Risk and Financial Management, 13(12), p. 295. Available at: https://doi.org/10.3390/jrfm13120295.

Mutual Credit Services (no date) 'Use-Credit Obligations'. Available at: https://www.mutualcredit.services/use-creditobligations (Accessed: 2 January 2024).

Slater, M. and Jenkin, T. (2016) ‘The Credit Commons: A Money for the Solidarity Economy’. Available at: http://www.creditcommons.net/assets/credit-commons.pdf (Accessed: 15 December 2023)