Sardex

From P2P Foundation
Jump to: navigation, search

= "an innovative regional B2B credit club on the island of Sardinia. It helps member businesses find opportunities to trade with each other". [1]

URL = http://www.sardex.net

Definition

"Sardex is a regional business-to-business (B2B) "commercial credit circuit," or "credit club" - a members-only network that allows local Sardinian small and medium-sized enterprises (SMEs) to do business by extending each other euro-denominated credit rather than paying in cash." (http://www.dw.com/en/sardex-a-model-b2b-credit-club-gives-hope-to-italys-smes/a-19305701)


Description

1. John Rogers:

""Two other more recent regional currency projects (City of Nantes in France and Sardex in Sardinia) are sometimes talked about as descendants of WIR (probably due to the same misunderstanding about WIR's core mechanism) but both projects are REALLY 'mutual credit' systems and their constitutions prohibit them from giving loans to business themselves (while 3 party record keeping is OK).

True enough (and interesting enough) to say they were both inspired by the WIR and its dedication to the SME sector and what b2b clearing in the wider sense can accomplish. Nantes presents this on their project's roadmap pages, and defines Mutual Credit as one possible “clearing”/”chamber de compensation” mechanism in their Glossary." (https://www.facebook.com/groups/388256007926581/permalink/504084643010383/)


2. Gian Paolo:

"The Sardex scheme was created in Sardinia in 2006 as a start-up by Giuseppe Littera, Gabriele Littera and Carlo Mancosu, three young and unemployed graduates (oddly not in economics). It is no coincidence that they were inspired by the Wir, an alternative currency created in Switzerland after the crisis of ’29.Two Euro designed for Sardinia Born as a little firm, in June 2012, there were more then one million Sardex in circulation, and this number is growing very fast. Each Sardex is worth one Euro. Almost 800 firms participate in the Sardex programme. But how does it function? What are the reasons for its success?

This money aims to improve local commerce which have been struggling because of both global, local and national economic problems. The Sardex is a monetary network that connects various businesses – at the moment it is trying to open to private citizens - helping them to exchange services and products without using Euros or other state currencies, and outside the limits of barter. The network lends Sardex credits to firms as bank credit, but with no interest. Creditors have to solve their debts within twelve months from the loan. Thus far, all firms that have used Sardex credits to manage cash flow problems have resolved their debts with the Sardex scheme.

If a firm is in financial trouble, other firms may offer assistance buying their products or services. As an extrema ratio the firm could pay debts using the Euro. Up to now, all the firms have solved their debts using only Sardex credits. So this market is “euroless” and no actors should gain more money then they received. The Sardex scheme is a complementary market because its aim is to extend firms’ business. It doesn’t work inside the ordinary market but, as a small network, it partially depends upon it. The firms, which want to join the network, have to pay a registration fee and an annual subscription in Euro.

The Sardex is a hybrid form of money: it is an e-money and it is a local money used only in Sardinia. Thus Sardex credits are not a currency and they don’t compete with the Euro (they didn’t have any problems with Banca d’Italia though). Unlike the Euro, Sardex credits have a very specific function: supporting local businesses in Sardinia. The question is: how are Sardex credits a form of money? We could say Sardex credits are money because people believe in them and because people have trust in the Sardex system. That's an easy answer but as a sociologists we should want more. The president of the project, Gabriele Littera, thinks that the strength and the reason of the success of Sardex lies in people’s confidence in the network : “We don’t have an algorithm, just relations, our brokers try to help who is in trouble suggesting them new businesses. Technology is an aid.”

He underlines the communitarian aspects of the Sardex but we said that trust is not a sufficient explanation. We must also take into consideration the technologies that permit the circulation of this form of money. Sardex credits are not just a simple instrument. They are part of a socio-technical and economic system. Indeed, if we disconnected the servers that manage Sardex transactions, it would be the end for the project." (http://everydayeconomies.net/blog/rise-sardex)

How it works

Nils Zimmermann:

"Sardex member businesses gain access to an online platform that allows them to do business by extending each other credit. A dentist, for example, can offer to fix the teeth of a carpenter and be paid in Sardex credits. The dentist can then use Sardex credits she's earned to buy groceries from a grocer. The grocer, in turn, can use the Sardex credits he's earned to pay the carpenter to build some new shelving for his store.

That closes the "credit loop" - and several transactions have occurred without anyone having to pay any actual euros. "Over the course of the year, each Sardex member business is expected and encouraged to buy and sell goods or services using Sardex credits in roughly equal volume, so their net credit balance fluctuates around zero," Littera explained. "That's necessary for the system to work."

Each Sardex member negotiates an upper limit to how much Sardex debt they can get into, and how much Sardex credit they're willing to accept in payment. All details of each member's credit status and limits are open for online viewing by other members. "Trust is a key part of this system," Littera said. "Transparency helps build trust."

In addition to providing the online platform and credit accounting framework, Sardex actively helps members find trading opportunities. Sardex brokers monitor members' online offerings and accounts, looking for possible matches – say, an olive oil producer and a grocer. They call up prospective counterparties and suggest they do business with each other.


...


The business model of the Sardex corporation itself - the way it funds its own operations - is simple: Member businesses play a flat annual fee to Sardex, ranging from several hundred to a few thousand euros, depending on the size of the business. There are no transaction fees, and members are welcome to call Sardex's B2B brokers for advice or help anytime they like." (http://www.dw.com/en/sardex-a-model-b2b-credit-club-gives-hope-to-italys-smes/a-19305701)


Status

Nils Zimmermann:

"In 2015 we had 51 million euros in transaction volume," Littera said, adding that most of it was generated by a highly active minority comprising around one-quarter of Sardex members. "Our goal is to sign up 10,000 subscribers, or about 10 percent of Sardinia's businesses. We're at 3,200 now.


...


A little over a year ago, Sardex began to replicate its business in seven other regions of Italy, including Lombardy and Sicily. They hired a small founding staff of three or four people in each of those regions, whose job is to recruit SMEs to a regional credit club.

"We need about 600 member businesses in each region to reach break-even, based on our experience in Sardinia," Littera said. "We just got a 3-million-euro investment this April from a consortium of public and private investors, so that's how we're financing our expansion."

Each regional credit club will operate independently - that is, Lombardy members will only trade with other Lombardy members, not with Sardinian members. The point is to foster intra-regional, local trade.

Littera believes a total annual transaction volume of a billion euros is a realistic goal for Sardex's credit clubs in Italy. That's only a small fraction of Italy's GDP, he noted.

"If the Italian government were someday willing to accept Sardex credits in payment for taxes - well, that would completely change the picture. We could grow much bigger," he said. "But getting permission to pay taxes in Sardex credit - that isn't likely to happen."

Within a few years, Sardex may expand to other countries. "We've been getting enquiries from all around the world – Brazil, Croatia, UK and Catalunya, for example," Littera said. "We're interested in expanding beyond Italy, but we're moving carefully. Our approach is to under-promise and over-deliver, not the other way round." (http://www.dw.com/en/sardex-a-model-b2b-credit-club-gives-hope-to-italys-smes/a-19305701)


Discussion

"What problems endanger monetary networks like Sardex?

The first issue is preventing opportunistic behaviours that could undermine trust. The use of Internet mainly solves the problem because every transaction is public and nobody can operate anonymously. Transparency is useful also for the public finance because tax evasion is impossible inside Sardex scheme. Furthermore, the web can produce a sort of community memory: the Sardex, unlike currencies, doesn’t have juridical and legal bodies that prevent and punish bad behaviours. It needs a high level of transparency for the transactions and only a proper use of Internet can offer this service.

The second problem concerns what goods the network can offer. It has to be balanced and adequately extended otherwise the deficits would render the network’s participation unprofitable. Again a proper use of the technological support solves the problem. The web allows a constant exchange of information among the users and, in the same time, the brokers who manage the network could work on the basket of goods. The supply of services and products is public and brokers can pinpoint every deficit.

Trust is not inspired only by the group identity –being Sardinian- or by the relation with the brokers but it is produced also by the technology that transmits fundamental information. Networked technologies are not only an instrument. They are an important part of this kind of money. There is a relationship of agency between all the actors involved in the network and the technological infrastructure. Citing Keith Hart: “Then money could take a variety of forms compatible with both personal agency and human interdependence at every level from the local to the global.” 1 We already know that technological impact is very important in modern financial markets, for example we can think about the hedge funds and their powerful servers. 2 But what I would like to propose in this brief reflection is that the technological development must be taken into consideration even when the research field regards small monetary networks and even where the group identity seems to be the most important element. Not infrequently the opposition between community and global society, barter and financial trade are based on the same infrastructures." (http://everydayeconomies.net/blog/rise-sardex)


More Information