THE question is often asked what currency would an independent Wales use but it appears the hypothetical has already been answered as the Celyn is set to launch this summer.
But rather than replace Sterling the Celyn will be an alternative that Welsh businesses and consumers can spend alongside pounds and pence.
The ‘community currency’ is an alternative intended to help businesses use their assets, such as the stock or services they trade, as an option instead of, or alongside, money.
The ‘mutual credit’ model already operates in Europe with the WIR model in Switzerland having been in place since 1934 and the Sardex Pay system in Sardinia credited with saving jobs and businesses during the 2008 to 2010 financial downturn. It has since developed into a system used across Italy.
Eifion Williams, who has authored a report, Circular Wealth Wales, and is the CEO of Circular Communities Cymru which is introducing the Celyn.
While there is a current fad for ‘crypto currency’ Williams says the Celyn, and the European systems it is model on, are based on the real world economy.
He explains the concept as two businesses, with an existing relationship, selling cheese and wine agreeing to accept payment in each other’s goods rather than cash.
“But that is just battering,” says Williams: “The difference is in the value you give things. You could give me £100 worth of stock in exchange for £80 worth of goods and I’d put it in a ledger that you now have a credit of 20 Celyn.
“If that 20 Celyn could only be spent with me that’s still just barter but if you can take it away and spend it down the road, in Aberystwyth or Bangor, then we’re creating currency and that’s when things get exciting.
“The difference between this and others, what are called alternative currency, is this is based on the real economy,” says Williams.
“Crypto currency rely on a digital code to create scarcity.”
The attraction for businesses would be they can trade what they may have plenty of in place of money which could be in short supply, helping with cash flow.
Williams, who spent 2019 travelling around Europe to see ‘place-based’ currencies in action, says this is how businesses in Sardinia were able to stay afloat during the 2008 downturn.
The well-established Swiss model accounts for nearly 17 per cent of all businesses in the country with annual trade equivalent to nearly two per cent of the economy.
A string of businesses across Wales are already committed to joining the network, creating the credit lines needed for the Celyn to function as a currency, and Williams says, as in Sardinia, it could also prove attractive as a voluntary per centage of wages.
“In Sardinia employees don’t see it as restrictive, they can take it and spent it on their high streets and when I was there the high streets were thriving in small towns.
“An employee could get 10 or 20 per cent of their wages in Sardex credit and it just means changing buying habits, instead of going to McDonald’s, Tesco or Walmart they go to the local butcher’s or they may have been shopping locally anyway.
“In the downturn a lot of businesses faced going to the wall or going to part time pay and Sardex said ‘we have this other option’.”
The team behind the Celyn, which is backed by the Welsh Government’s Foundational Economy Scheme, believe Wales has the critical mass needed in terms of community-facing SMEs, employees and customers to replicate the success seen in other countries.
Jackie Milton, a supporter of the Celyn Project from the Newtown-based Robert Owen Community Bank, said: “Mutual credit benefitted the Sardinian SME economy to the tune of 50 million Euros last year alone.
“Wales is similar to Sardinia with SMEs making up 99 percent of our businesses in Wales, so this has the potential to significantly boost the economy in rural Wales.”
- This article originally appeared on our sister site The National.