The idea of a Mutual Credit System originated in Switzerland during the Great Depression when businesses were adversely effected by:

·         Slowdown in economic activity

·         Shortage of cash

·         Difficulty in obtaining credit

Banks contributed to the problem by reducing, or eliminating, credit lines even to customers they had long relationships with. This was not caused by a change in the clients’ credit rating or ability to repay loans, but by the banks’ new policies and their reluctance to part with the limited cash available. This resulted in a drastic reduction of working and investment capital for many businesses.

Many of those businesses had valuable assets such as their signatures, equipment, inventory, real property, etc., however, those assets were simply not acceptable by banks as security for loans.

From the adversity came the idea of forming a cooperative where qualified participants could, collectively, create a Mutual Credit System, and pool some of the assets in a financial vehicle similar to a Trust* as backing for a Trade Credit, equal in value to a Swiss Franc, which could be used, in combination with cash, to make buying and selling transactions between cooperative members.

The monetization of the assets created an immediate increase in the working and investment capital for the co-op members, which resulted in a general increase in business activity.  

________________________