B2B Currency

B2B Currency


Once upon a time, during a crisis similar to the one in which we are now getting
mired, sixteen businessmen got together to decide what they could do among themselves.
They and/or their clients had all received a notice from their respective banks that their
credit line was going to be reduced or eliminated.

They realized that business A needed the bank loan to buy goods from
business B, which in turn needed money to buy stuff from its own suppliers. So they
decided to create a mutual credit system among themselves, inviting their clients and
suppliers to join. When business A buys something from B, A gets a credit and B the
corresponding debit. They created their own currency, whose value was identical to the
national money, but with the interesting feature that it didn’t bear interest. A debit in this
currency needs to be reimbursed with sales to a participant in the network in the same
currency, or settled in national money. The country’s banks mounted a massive press
campaign to try to squelch this revolutionary idea.

Miraculously, that campaign failed, and this little system saved many of the businesses involved. A cooperative was set up among the users to keep the accounts dealing with that currency. Soon participants could also borrow from that cooperative in that currency at the remarkably low interest rate of 1% to 1.5%. All such loans needed backing by inventory, real estate, or other assets, exactly as in a conventional bank. Over time, the system grew to include one quarter of
all the businesses of the entire country.

This is not a fairy tale, but the true story of the WIR system. The country is
Switzerland and the sixteen founders met in Zurich in 1934. Within three months there
were 1,700 participants; and within a year some 3,000, linked by a catalog of available
goods and services, classified in 850 categories. The system still works today: the annual
volume of business in the WIR currency now is about $2 billion per year.


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