Welsh complementary currency piloted by Churchill Fellow

The Welsh Government has announced that Circular Economy Wales is being awarded £100,000 to pilot a mutual credit system – a mechanism that allows businesses to trade without money. This system was researched by Eifion during his Churchill Fellowship in Europe in 2018.

Based on a model in Sardinia, called the Sardex, the mutual credit system is targeted at Wales’ small-and-medium-sized-businesses (SMEs). Member businesses will have access to the goods and services they need within the business membership. They then pay back with their own surplus goods or services into the system (i.e. to another business that needs that resource) within a year.

Eifion said: “The Sardex benefited the Sardinian SME economy to the tune of 50 million euros last year alone. Wales is similar to Sardinia in that SMEs make up 99% of our businesses, so this has the potential to significantly boost our economy.

“If Wales had initiated a copy of the Sardex in 2008, and it had followed the same growth trajectory, Welsh SMEs would now be strengthened to the tune of £256 million in additional turnover.”

This inter-trade of goods and services, using no cash, helps SMEs to weather economic storms and maintain local jobs. The system doesn’t require businesses to make a dent into financial reserves and they don’t have to pay interest. Eifion predicts that over ten years, the impact of the scheme will equate to £256 million of additional turnover for Welsh SMEs. This is because the amount of transactions between Welsh SMEs will increase, as a result of the businesses not having to rely on having the cash flow necessary for those transactions.

The figure is based on the savings per business in Sardinia over the same period as a result of the Sardex. As it evolves, credit can be used by employees and customers too.

Eifion’s Welsh Government funding will allow for a consultation and pilot, which is planned to take place in North Wales. The eventual aim is to roll out the currency across Wales. It will be called the Celyn, which is the Welsh word for holly, signifying the evergreen strength that the project hopes to contribute to the Welsh economy.

Consultation on the Celyn will begin at the Circular Economy Wales conference on 7 November in the Principality Stadium, Cardiff. This event is open to the public and you can book tickets here.

Eifion’s project is based on research into co-operatively managed dual currency systems developed in Italy, France, Germany, Spain, Switzerland and Holland, countries he visited during his Fellowship. This evidence base enabled him to develop proposals for Wales with key partners and decision makers in the Welsh government, including the Welsh First Minister.