Co-authored by Katalin Hausel

What if the hundreds, even thousands of existing local currency initiatives were interoperable? Could they constitute a global system of exchange and offer at least a partial alternative to a dominant parasitic financial system? What are the social and technical obstacles to scaling grassroots initiatives which grow out of local community action?

The Credit Commons is a proposal from the builders of two of the largest blocs of community currencies in the world. Tim Jenkin, developer of Community Exchange Systems and Matthew Slater, developer of Hamlets and cofounder of Community Forge. A new white paper introduces the a backbone accounting infrastructure, touches on the economics and the technology, and describes the parts already in place. A small but diverse group has formed around the initiative and set up creditcommons.net where the paper is hosted and developments can be recorded.

Interoperable complementary currencies is hardly a new idea, but it is difficult both technically and politically because grassroots initiatives are by nature diverse and disconnected. The profusion of handmade platforms ten or fifteen years ago is consolidating to a few platforms, making it easier to address the question of interoperability between perhaps 1000 to 2000 online exchanges.

Previous attempts to enable intertrading have all focused on creating new ‘meta’ platforms in which exchanges rather than members keep accounts. This is technically easy but results in cumbersome user experiences and even accounting discrepancies. More seriously, governance – of exchange rate mechanisms, credit allocation and dispute resolution – always ended up in the hands of whoever happened to own the platform.

The problem of ownership and control has become easily solvable since Bitcoin. Blockchain protocols replace ownership with a set of rules and consensus algorithms. But the Credit Commons’ resemblance to Bitcoin stops there: what we intend is an entirely different monetary model with an implicit social aspect.

Bitcoin as money, being limited in quantity and costly to produce, is firmly based in the commodity money paradigm. Commodities are ideal for the store of value function because they are actually ‘valuable’. A good medium of exchange though, must be sufficient and available when needed, but doesn’t have to be valuable. Exchange means to give and receive economic value in the same measure, as opposed to accumulating credit or debit indefinitely. If exchange is the intention then valueless tokens, which have meaning only within that marketplace, function perfectly as intermediaries, facilitating complicated multilateral exchange. A mutual credit circle is a group of people who give each other credit, trusting them to repay, and use that credit as liquidity between themselves. This was all well understood monetary theory but has been losing traction since about 1694.

However the drawback of relying on trust is that it thins as groups grow. Hence the most innovative part of the credit commons design is that mutual credit systems can be nested into super-systems. Each circle can also retain full autonomy over monetary policy and exchange rates, as long as they balance imports with exports.

The Credit Commons is more than just a technical proposal to piece  different applications together.  By proposing trust circles governed at every level, it proposes an entirely different way of organising our economy. It is not just a technical protocol. The smallest circles govern themselves and come together voluntarily to form larger blocs with more collective power to issue and redeem credit.

Monetary thinkers throughout history have argued that money best serves society when its value comes not from its metal content or even its rentable income, but when it supports existing social frameworks of trust and exchange. A payment of valueless money is not the end of an exchange, but merely its half-way point; the exchange is complete only when both parties have something of value in their hands and the place-holding tokens have returned to nothing.

The Credit Commons does not need to be sold to investors. Thanks to available technology, it can be created with comparatively limited resources, as a parallel exchange system to the existing one. We are seeking technical partners to join us in assembling a network to connect multitudes of small alternative currency communities, so that

“Perhaps a day might come when there would be at last be enough to go round, and when posterity could enter into the enjoyment of our labors.” (Keynes, The Economic Consequences of the Peace (1919))

2 Comments Credit Commons: Solidarity economy money

  1. James Edwards

    hello Matt,

    I first saw a video you appeared in at the Voices of the Impact Economy conference. I have been working on a proposal for an advanced credit model for an equitable and just economy, after reading about the harmful effects of that the conventional monetary system. I’m not a professional in any field associated with finance or economics, but I am an educated layman who has endure the worst ill effects of the current system.

    I would appreciate the opportunity to participate and share the knowledge and insights I have gleaned from almost 10 years of research into the modern financial system and alternative economic systems.

    I have contacted you in the past few months through the Community Forge website regarding my hopes to implement a local complementary currency system in my community.

    I would appreciate it if you could contact me to discuss the possibility of a mutually beneficial collaboration.

  2. benjamin melançon

    Let’s do it? First step? I know people here in Boston (Ujima Project) are looking into starting a community currency. How do we do it in a way that could become part of a Credit Commons?

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