Sign In

Using a Mutual Credit System to support the development of regenerative local economies

A mutual credit system, when used in conjunction with a local digital currency, serves as a means of facilitating transactions within a community or a localized economy. The primary purpose is to enable participants within that community to exchange goods and services without necessarily relying on traditional forms of currency like national currencies (e.g., dollars, euros) or centralized banking systems. You can find a definitions and examples of Mutual Credit Systems on LowInpact.Org's page on Mutual Credit.

"It only requires that we each take control of our own credit and give it to those individuals and businesses that merit it and withhold it from those that do not." - Thomas Greco. Credit:

Here's how a mutual credit system with a local digital currency typically functions:

1. Local Economic Empowerment: It aims to strengthen the local economy by encouraging exchanges among members of the community. It promotes localized trade and supports businesses and individuals within the region.

2. Facilitation of Transactions: It provides a platform or system where participants can trade goods and services among themselves using a digital currency unique to that community. This digital currency operates on a system of credits and debits, where members have an account that records transactions.

3. Non-Interest-Bearing System: Unlike traditional banking systems, mutual credit systems usually do not involve interest charges on credit balances. Participants can transact with others even if they have a negative balance (debt) as long as they contribute goods or services to the community.

4. Encourages Collaboration and Reciprocity: It fosters a spirit of collaboration and cooperation among community members. Participants often engage in reciprocal transactions, buying from one another, thereby supporting local businesses and fostering a sense of community.

5. Local Resilience and Sustainability: By encouraging local trade and reducing dependence on external economic factors, a mutual credit system can contribute to the resilience and sustainability of a community's economy.

6. Complementary Currency: It operates alongside national currencies, offering an alternative means of exchange within a specific community or network. It doesn't seek to replace traditional money but aims to complement it for localized transactions.

Overall, the purpose of a mutual credit system using a local digital currency is to create a system of exchange that strengthens community ties, encourages local economic activity, and fosters self-reliance within a specific geographic area or network of individuals sharing common goals or interests.

The LocalScale platform now allows local communities to manage the creation of their bioregional currency while allowing those communities to activate a Mutual Credit System. Please contact us or sign up for a free account if you're interested in trying a Mutual Credit System in your community.

Prev Post
10 Reasons Why a Local Social Network Can Empower Communities and Increase Bioregional Systemic Resilience