digplanet beta 1: Athena
Share digplanet:

Agriculture

Applied sciences

Arts

Belief

Business

Chronology

Culture

Education

Environment

Geography

Health

History

Humanities

Language

Law

Life

Mathematics

Nature

People

Politics

Science

Society

Technology

Mutual credit is a type of alternative currency in which the currency used in a transaction can be created at the time of the transaction. Local exchange trading systems (LETS) are mutual credit systems. Typically this involves keeping track of each individual's credit or debit balance. Although the effect is like a loan, no interest is charged, and since mutual credit allows for trading and cancelling balances with others, debts can be paid off indirectly. The "IOU" is a common example of this.

Advantages and disadvantages[edit]

One economic advantage of mutual credit is that the currency supply is self-regulating—the money supply expands and contracts as needed, without any managing authority. The availability of interest-free loans is a great advantage to members of the system.

One downside of mutual credit, as with any form of credit, especially if it is run with unsecured debt, is the possibility of people exploiting the system by running up a large negative balance and not repaying it. This problem can be addressed by caps on negative balance that can be raised as balances are paid off. The problem can also be addressed by a using a well-worded membership agreement with clauses that specify members remain fully liable for all negative balances and reasonable time limits for calling in stagnant negative balances. Another solution is limiting the system to a small, close-knit community based on trust, where the community holds people accountable. Perhaps for this reason,[citation needed] most mutual credit systems are small, under 2000 members.[citation needed].

Examples and types of systems[edit]

The local exchange trading system (LETS), the Community Exchange System, the Cincinnati Time Store and, (in the United Kingdom), the Echo business trading network are examples of mutual credit systems. A number of different mutual credit systems have been proposed. Mutual credit can be combined with a number of features of alternative currency systems. For example, it is usually (but does not need to be) a local currency, and it can have a demurrage fee for the holding of balances.

See also[edit]

References[edit]

  • T.H. Greco. "Money: understanding and creating alternatives to legal tender". White River Junction, Vt: Chelsea Green Publishing, 2001. E-book excerpted version

Original courtesy of Wikipedia: http://en.wikipedia.org/wiki/Mutual_credit — Please support Wikipedia.
This page uses Creative Commons Licensed content from Wikipedia. A portion of the proceeds from advertising on Digplanet goes to supporting Wikipedia.

253 news items

 
Episcopal News Service
Tue, 21 Apr 2015 07:37:30 -0700

The motion on poverty also welcomed the Churches' Mutual Credit Union, which was launched earlier this year, the Church's progress towards becoming a Fair Trade Province and its revised ethical investment policy. The Governing Body, made up of 144 ...

Bournemouth Echo

Bournemouth Echo
Sun, 26 Apr 2015 01:03:45 -0700

He was a key player in setting up the Churches' Mutual Credit Union, of which he was chair of the project board and is now president. Archdeacons have a number of functions, prime among them representing their parishes to the Bishop, and the Bishop to ...

VICE

VICE
Mon, 06 Apr 2015 21:08:35 -0700

Ecos are not a high-tech cryptocurrency like Bitcoin but a simple mutual-credit network. While the idea for Bitcoin is to consign transactions entirely to software, bypassing the perceived risk of trusting central authorities and flawed human beings ...

Anglicannews

Anglicannews
Wed, 11 Feb 2015 07:00:00 -0800

The Archbishop of Canterbury's drive to promote access to responsible credit and savings receives a major boost today with the launch of the Churches Mutual Credit Union Ltd. (CMCU). The Most Rev Justin Welby joined the Moderator of the General ...

The Guardian

The Guardian
Thu, 16 Apr 2015 08:02:24 -0700

That is, to make your own mutual credit associations, and local script currency. Like you say, just to give everyone a loan accomplishes nothing. They talk about a Wedge, a Pump and a Sink. Wedge is the backer or reason that the project can succeed.
 
Bloomberg
Tue, 11 Nov 2014 09:48:45 -0800

Nov. 11 (Bloomberg) -- Old Mutual Plc, the largest insurer in Africa, had its credit rating lowered one level to Baa3 by Moody's Investors Service as a result of the weakening credit worthiness of South Africa and its banking system. The downgrade ...

Western Gazette

Western Gazette
Mon, 20 Apr 2015 08:33:45 -0700

He was a key player in setting up the Churches' Mutual Credit Union, of which he was chairman of the project board and is now president. The Right Reverend Nicholas Holtam, Bishop of Salisbury, said: "I am delighted to be able to appoint an Archdeacon ...
 
Church Times
Thu, 19 Feb 2015 16:22:30 -0800

The Churches' Mutual Credit Union (CMCU) is a collaboration between the C of E, the Church in Wales, the Scottish Episcopal Church, the Church of Scotland, and the Methodist Church. Any cleric, lay minister, or employee of a church or church charity is ...
Loading

Oops, we seem to be having trouble contacting Twitter

Support Wikipedia

A portion of the proceeds from advertising on Digplanet goes to supporting Wikipedia. Please add your support for Wikipedia!

Searchlight Group

Digplanet also receives support from Searchlight Group. Visit Searchlight