digplanet beta 1: Athena
Share digplanet:


Applied sciences






















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]


  • 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.
264434 videos foundNext > 

Favabank Mutual Credit System Explained.wmv

An introduction to Mutual Credit Systems and how they can facilitate more complex barter arrangements.

Prof Bernard Lietaer On the philosophy behind mutual credit systems

Recording date: 23. April 2014 Location: School of Business and Economics, Maastricht University Speaker: Prof. Bernard Lietaer Title: In conversation What is money? And how successful is...

Creating a LETS Mutual Credit System with Ripple

I demonstrate how to set up a very basic LETS mutual credit-style system using the Ripple protocol. Learn more about mutual credit here: https://en.wikipedia.org/wiki/Mutual_credit Create...

Mutual Credit in peer to peer network

Discribed how Mutual Credit works in Ripple, p2p trust nework.

The Credit Union Movement: A Historical Portrait (2002)

Not for profit, not for charity, but for service. A credit union history piece made possible by CUNA Mutual Group. Narrated by Edward Herrmann. Archival footage and sources courtesy of CUNA...

Mutual Credit

An explanation of mutual credit in the context of Modern Monetary Theory and a critique of the state. Continued discussion of this video: http://youtu.be/uun2YDQOTmc Contradictions of...

Mutual Savings Credit Union Auto Quest 2014

Let Mutual Savings help navigate you to the lowest rates during Auto Quest!

What is Mutual Credit?

An explanation of kingstoncommunity.ca 's mutual credit system.

London Mutual Credit Union

Member share their reasons for joining the London Mutual Credit Union

Members share their reasons for joining the London Mutual Credit Union.

264434 videos foundNext > 

247 news items


Tue, 17 Mar 2015 18:58:36 -0700

Michael Lim, chairman of SAC, said: "This mutual credit recognition is a testament of the robustness of the Singapore QP and will serve as a strong foundation from which the CA Program and Singapore QP candidates can leverage on, in their journey ...

Poughkeepsie Journal

Poughkeepsie Journal
Sat, 14 Mar 2015 19:51:44 -0700

I reflect upon this in light of my own work for the Hudson Valley Current, a mutual credit system I've worked for as part of Bard Center for Environmental Policy's graduate internship program. After all, once I tell my grocery store acquaintance about ...


Fri, 20 Mar 2015 08:22:28 -0700

The Church of England opened the Churches' Mutual Credit Union (CMCU), which offers loans and savings accounts, initially just to churches (the Church of England, the Methodist Church of Great Britain, the Church of Scotland, the Scottish Episcopal ...


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 ...
Brock Press
Mon, 16 Mar 2015 09:52:30 -0700

Buyers and sellers can use alternative methods and media of exchange, including mutual credit clearing, community currencies, cryptocurrencies and commodity money, and different arrangements can operate concurrently in any location to facilitate trade.

3BL Media (press release)

3BL Media (press release)
Tue, 03 Mar 2015 12:03:45 -0800

Developed over the last four years, Mutual Aid Networks are a new form of cooperative that utilize many collaborative economic tools, such as timebanking, price-based mutual credit, shared resources, lending pools, and cooperative savings, to create a ...
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 ...
Scoop.co.nz (press release)
Wed, 18 Mar 2015 16:18:48 -0700

The Singapore Accountancy Commission (SAC) and Chartered Accountants Australia and New Zealand (CA ANZ) signed a Memorandum of Understanding (MoU) on Tuesday for mutual credit recognition between SAC's Singapore Qualification Programme ...

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