Cagliari, an electronic mutual credit system

During the first meeting of the COMPARE project at the SARDEX premises, Giuseppe Littera, one of the co-founders of Sardex offered us a guided visit and many interesting details about the birth and evolution of the Sardex networks. Detailed descriptions and analyses are available at the official report and two complementary publications co-authored by partners of our project (Littera et al. 2014; Dini & Kioupkiolis 2014), which were presented at the Inaugural conference of the World Interdisciplinary Network for Institutional Research (WINIR).

Sardex is an electronic system of mutual credit intended to support mainly B2B interactions between firms on the island of Sardinia. Sardinia has an area of 24,000 square km, or about 8% of the area of Italy, and a population of 1.6m, or about 2.7% of the population of Italy (60m). Sardinia’s GDP of 33b Euro is about 1.8% of Italy’s 1800b Euro. GDP per capita in Sardinia is therefore about 2/3 of the Italian figure (20k vs. 30k Euro). Although we have not looked at economic data beyond the Wikipedia figures cited here, it is plausible to say that the recent economic crisis has hit Sardinia harder than the rest of Italy. For instance, unemployment increased from 8.6% in 2008 to 14.6% in 2012. It was partly in response to this situation that Sardex was instituted. Sardex is the name given to the Sardex credits as a unit of account, where 1 Sardex = 1 Euro, as well as to the company that provides the credit-clearing service.

sardex_meeting1Figure 1: The sticker used in shops accepting the Sardex currency.

Sardex is modelled on the WIR, but uses only an electronic LETS-like system of credit and debt accounting for any size transaction. Rather than charging a fee per transaction it charges a yearly membership fee that varies from 200 Euro for small non-profit ‘social enterprises’ to 3000 Euro for large companies such as the electric utility company (whose Sardinian branch is also a member). For the moment Sardex does not issue large loans such as mortgages. Therefore no interest is applied to any negative or positive balance at all. It is not clear whether this might change in future developments. Unlike the LETS or even WIR systems, in Sardex individual consumers cannot go negative, they need to have a positive credit balance in order to make a purchase. Four years from its founding, the current number of Sardex members is about 2000 companies, out of 146,500 registered VAT numbers in Sardinia, or 1.4% (Crenos Territorio 2014).

sardex_meeting4Figure 2: Sardex mentioned in popular Italian newspapers.

The motivation to create SARDEX arose from the realization by the founders, who at the time were living and working in Germany, of the dire situation of the world economy in or around 2007 and of the repercussions the crisis was going to have on the Sardinian economy. The founders took the WIR as a model that could be replicated in Sardinia. They were attracted by the larger geographical reach and turnover of the WIR relative to other CC examples they had examined, and specifically by the focus on corporate rather than individual membership. A for-profit company was chosen over a non-profit cooperative because the latter are perceived as too cumbersome structure in Sardina, whose politics are even more polarized than in the rest of Italy, and they felt that this could be an obstacle to the joining by average businesses. The Sardex s.r.l. (‘Ltd’) bylaws dictate that all profit be reinvested in the company, which now counts approximately 15 employees.

sardex_meeting3Figure 3: Members of the COMPARE project and guests outside the premises of Sardex, in Serramanna, actually the house of Giuseppe’s grandmother.

As a final point on the founding of Sardex, it is interesting to note that none of the founding members has an economics or engineering/computer science background. They are all humanists.