C3: Commercial Credit Circuit

Mutual credit system aiming to promote local commerce and access to short-term credit for SMEs

Information

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UY Uruguay
Web http://www.stro-ca.org/en/services/local-exchange-systems/c3
Maturity

Mature

About the project Edit

The Commercial Credit Circuit, or a C3, is a mutual credit initiative by Dutch non-governmental organization STRO. This mutual credit system (credit from all to all) is one through which associated companies can make transactions using an internal exchange unit. This exchange unit is backed up by money and/or financial guarantees. C3 can channel any public or institutional expense. The advantage of this process is that this resource has a greater stimulus to circulate locally, and consequently, generates a greater impact in the local economy and in tax collection.

C3 is now used nation-wide in Uruguay, where the government and various companies offering electricity, gas, housing, telephone and internet-services participate in the project. The C3 credit circuit is also used locally in Brazil.

Themes

In what ways is this project unique and creative? Edit

The C3 is a complementary currency system that uses insured invoices as an exchange mean. The recipient has the choice to either cash it in national money (at a cost), or directly pay its own suppliers with the proceeds of the insured invoice.

It also uses a cellphone based banking system, Cyclos, which simplifies the transaction process and cuts its costs.

What is the social value of this project? Edit

C3 allows SMEs that otherwise wouldn't have access to easy credit to do so. Due to its lean IT based infrastructure, C3 is an resource-efficient way to promote regional economies. Moreover, all C3 exchanges are traceable, which can help transition black and grey economies in the official sphere.

What is the potential of this project to expand and develop? Edit

C3 is already used nation-wide in Uruguay and regionally in Brazil. Due to its lean IT based infrastructure, C3 is an ressource-efficient way to promote regional economies and could be implemented at low cost in other countries.

What was the triggering factor of this project? Edit

What is the business model of this project? Edit

"1. Participating businesses start by securing an invoice insurance up to a predetermined amount, based on the specific creditworthiness of their own business and of the claims they obtain on third parties.

2. The business that has obtained such an insurance (hereafter referred to as business A)opens a checking account in the clearing-network, electronically exchanges the insured invoice for clearing funds, and pays its supplier (business B) immediately and fully with those clearing funds via the clearing network.

3. To receive its payment, business B only needs to open its own checking account in thenetwork. Business B has now two options: either cashing it in for conventional nationalmoney (at the cost of paying the interest for the outstanding period, e.g. 90 days; plus banking fees); or pay its own suppliers with the corresponding clearing funds (at no cost).

4. Whatever the timing of the payment is to business A, business B is in a position to use the positive balance on its account in the network, for instance to pay its supplier business C.

5. Business C only needs to open an account in the network. It has then the same two optionsas business B: cash it in for national money, or spend it in the network. And so on…

6. At maturity of the invoice, the network gets paid the amount of the invoice in nationalmoney, either by business A or by the insurance company (in case of default of businessA). Whoever owns at that point the proceeds of the insured invoice can cash them in for national money without incurring any interest costs"


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