crco:credit_commons [Knowledge Commons]

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This topic is part of [[gt:economy|Economy & finance]].
====== Credit commons ======


![](https://lowimpactorg.onyx-sites.io/wp-content/uploads/cc-main.jpg)

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> “If the entire world gets a decentralised financial system with inter-connected mutual credits, I think that could be amazingly beautiful, and move us past this ‘Stage 1 Civilisation’ where we actually start to look at what we want to do as humans, rather than just make money.”

— Will Ruddick, [Grassroots Economics](https://www.grassrootseconomics.org/)



===== What's a credit commons? =====

It's a way of unifying small currency projects into a global 'money system' which is greater than the sum of the parts. Money in the modern world _is_ credit issued by banks for profit, but from a commons perspective, that credit should be issued publicly for the benefit of the community.

Any [mutual credit](/mucr/mutual_credit) trading network is issuing credit for the good of the community, but that credit cannot leave the local network unless there are signed agreements about what happens if it does not return. The credit commons provides a framework, if not a template for those agreements, in which towns, regions, countries etc can make their own agreements, and make them compatible with their neighbours'.

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![](http://lowimpactorg.onyx-sites.io/wp-content/uploads/greco-1.jpg)

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_[Thomas Greco](http://lowimpactorg.onyx-sites.io/posts/future-of-money-thomas-greco) coined the term credit commons to describe a global system of mutual credit networks linked via a protocol._
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We can speak of a credit commons which exists between all humans who ever lend and borrow. The Credit Commons Protocol offers a path to formalise this into a true financial system, with federated governance and infrastructure.

A protocol is a bit like the rules of chess. To exchange with each other, we have to agree about how we keep score, otherwise there'll be free-riding, disagreements etc. With chess, if someone has a different idea about what chess is, you're not going to be able to play with them. 

==== Global Credit Commons ====
The [[local currencies]] in recent decades and before have made little impact on people's lives or on the larger financial system. There are many reasons these systems were not adopted _en masse_ as their advocates hoped, but remain marginal until attention and resources run out. The Bristol Pound lived for a decade and consumed a few million real pounds of funding, but when the funding stopped there was no momentum.

But there is another way to scale - by making myriad tiny projects interoperable. That is the vision of the credit commons. No matter how the small the group, it should be able to become part of a larger network and trade with that network using its own credit.

Elinor Ostrom, in _[Governing the Commons](http://lowimpactorg.onyx-sites.io/wp-content/uploads/ostrom_1990.pdf)_, suggested that to grow, commons should be 'organised in multiple layers of nested enterprises', which is exactly what the CC does, in a recursive, fractal way, like [sociocracy](/soci/sociocracy). Groups of groups of groups, but for trade rather than governance.

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![](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-gold.jpg)

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_Unlike commodities that have been used as a means of exchange – like gold – credit money doesn't have to be dug out of the ground, transported around and stashed in vaults, with all the cruelty, environmental damage and wealth concentration that entails._
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==== Credit Commons Protocol ====

_Matthew Slater and Tim Jenkin introduced the Credit Commons Protocol via a [White Paper](https://creditcommons.org/assets/credit-commons.pdf) in 2016._ It's a set of standards and rules that govern how transactions are recorded and managed within a network. Each group has its own (digital) ledger, and there are rules for trading accross ledgers. Although it uses hashing to ensure consistency, this is not a [[blockchain]] architecture.

The Protocol doesn’t just keep track of balances, it checks members' balance limits, and prevents transactions that violate those limits. So you don’t just need trust and collaboration, you need balanced trade within the network, to allow members to buy and sell without becoming stuck at their limits.

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![](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-chess.jpg)

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_With chess, it doesn’t matter about the design of your board, or the appearance of the pieces – if the game adheres to the rules of the World Chess Federation, anyone who knows how to play chess can still join in. The same is true of local groups and the Credit Commons Protocol._
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Mutual credit is based on trust – which doesn’t scale. So previous mutual credit schemes had to stay small, trust-based and genuinely mutual, but without the economic diversity for widespread change. Or they go the way of the [Wir Bank](https://en.wikipedia.org/wiki/WIR_Bank) in Switzerland (it was formed as a mutual credit scheme about 100 years ago). They got big (about 1% of Swiss GDP) – but to scale up, they massively centralised, and now it's more like a private currency, run by a bank. The choice was to stay small and mutual, with negligible impact, or have a big impact, but lose mutuality. The point of the Credit Commons Protocol is that you can achieve both scale and decentralisation through recursive federation. Without the CC Protocol, as mutual credit networks grow, they can become centralised, and then vulnerable to buyout by venture capitalists.

[This article](http://lowimpactorg.onyx-sites.io/posts/mutual-credit-services-keeping-communities-alive-after-covid-explaining-the-credit-commons-protocol/) explains the CC Protocol in more detail.

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{{url>https://www.youtube.com/embed/V1jTLrToadg 560,315}}

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_Interview about credit commons with Tom Woodroof of [MCS](https://www.mutualcredit.services/) and [Local Loop Merseyside](https://localloop-merseyside.co.uk/)._
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===== What are the benefits of credit commons? =====

- **Democracy:** it's clear from the name that the means of exchange is credit (a relationship) rather than a commodity or token (a thing), that can be hoarded, accumulated and lent at interest, which concentrates wealth, creating inequality and [preventing real democracy](/demo/democracy).

- **Community:** credit commons is inherently community-based, and thrives on trust and cooperation. Communities can be geographical or based on shared interests and goals. Communities get control over their own economies, fostering trust and co-operation and a culture of mutual aid.

- **Transparency:** each group has its own ledger to record all transactions, that's accessible to all members, ensuring transparency and reducing the risk of fraud. Each community or network maintains its own ledger, and multiple communities can connect their ledgers to form larger networks.

- **Poverty:** transactions don't require traditional money - great for communities with little money (this doesn't mean that things are free of course, it just means that in effect, you pay for things with your work, rather than with money). It also removes the need for interest – which should make things cheaper (Magrit Kennedy [estimated](http://userpage.fu-berlin.de/~roehrigw/kennedy/english/Interest-and-inflation-free-money.pdf) the interest proportion of prices of consumer goods to be around 50%!). Also, rich countries export more goods to poor countries than they buy back, so poor countries run out of money, then fall into debt and servitude. That can't happen in a system where the surplus and deficit partners work together to balance trade rather than accumulating money or debt. That's why [Keynes wanted a global mutual credit system](https://en.wikipedia.org/wiki/International_Clearing_Union) instead of the IMF after World War II.

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![](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-ostrom.webp)

<caption>
_Elinor Ostrom, in_ [Governing the Commons](http://lowimpactorg.onyx-sites.io/wp-content/uploads/ostrom_1990.pdf), _suggested that to grow, commons should be 'organized in multiple layers of nested enterprises', which is exactly what the credit commons does._
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- **Resilience****:** communities are less dependent on external financial systems and can continue trading even during economic downturns or crises.

- **Accessibility**: accessible to anyone with the necessary technology, making it an inclusive alternative to traditional financial systems; particularly beneficial in marginalised communities.

- **Environment:** promotes local trade, because each network will probably charge a tiny transaction fee to cover costs, so fees will be slightly higher the further apart the parties in a transaction are (i.e. the more 'layers' the trade has to pass through). This gives an incentive to look more locally for what you need, so shortening supply chains.

- **Freedom from bankers:** the credit commons could replace money (credit issued by banks) with credit that we issue ourselves, which means no interest, no monopoly on credit creation, and no banks required!

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![Credit commons](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-poverty.jpg)

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_Credit commons doesn't require money – ideal for communities that don't have much of it._
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===== What can I do? =====

The main route to a global Credit Commons is via [credit clearing](/crcl/credit_clearing) and [mutual credit](/mucr/mutual_credit) – tools that can be used by networks of trading businesses. Credit clearing networks are growing in places like [Liverpool](https://localloop-merseyside.co.uk/), in ways that will be replicated everywhere. Local mutual credit networks can be generated from clearing schemes, or started by a group of small businesses that trade with each other regularly. [Contact us](http://lowimpactorg.onyx-sites.io/about/contact/) if you're part of a group that may be interested, and we'll put you in touch with specialists who can help.

The system has 2 layers – the protocol and the implementation (specific local agreements layered onto the protocol). Implementations can be unique and varied, as long as they speak the language of the protocol, so different groups can interact.

The CC Protocol is '[open source](/foss/open_source)' – anyone can use it freely. If you understand open-sourced code, you can see the [documentation and repository on GitLab](https://gitlab.com/credit-commons/credit-commons-documentation) (which includes ways to ask for help if you get stuck).

Each local group will have a 'front end' – an app for users, which can be unique, set up for local needs, that interacts with the ('back end') that does nothing but implement the shared Protocol.

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![](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-open-source-logo.png)

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_The protocol really is a commons. It belongs to everybody who uses it. The code is all open-sourced and free to anybody to use and even change to suit themselves._
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The 'front end' and 'back end' need to interact – i.e. instructions from users need to be certified as conforming to the Protocol. This requires an [API](https://en.wikipedia.org/wiki/API), which exists, and is again, free and open-sourced, [available via GitLab](https://gitlab.com/credit-commons/credit-commons-documentation/-/blob/master/README.md). This allows programmers to write their own implementations (back-end or front-end), confident that their code can interact with other CC implementations. And everything is interoperable with existing accounting packages.

Payments: imagine the global network as a tree, and businesses as leaves. A payment from leaf A to leaf B travels up a twig to a small branch etc, towards the main trunk, until it comes to the first common branch, from where it travels down smaller branches and twigs to leaf B.

Technologically-inclined people can contribute by developing and improving the software and platforms that support the Credit Commons, including creating user-friendly interfaces, enhancing security features, and ensuring interoperability with other systems. [Contact us](http://lowimpactorg.onyx-sites.io/about/contact/) if this might be you.

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![Credit commons](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-app.jpg)

<caption>
_A ‘commons economy app’ will be developed with 3 accounts – a wallet for shopping, using discounted vouchers bought with cash; a mutual credit account for trading – i.e. where you do your business; and a future use vouchers account, for savings / pension, where vouchers for essentials can be aggregated. The three accounts are connected, and eventually, all transactions can be via mutual credit rather than bank money._
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==== Credit commons and the commons economy ====

Tom Woodroof of [MCS](https://www.mutualcredit.services/) and [Local Loop Merseyside](https://localloop-merseyside.co.uk/) explained how various aspects of the commons economy can be connected via the CC Protocol: 

> “the vision is that you’ll have a wallet app on your phone. If you’re a business, you can add your invoices so that you can do credit clearing. You’re also part of a mutual credit network within that larger clearing network, so you have a mutual credit balance. In other parts of your life, you’re a consumer, so you have a balance showing how many local retail vouchers you have, and then you also have a balance that shows your rent credit obligations as a tenant of the local housing commons or your energy vouchers in the local energy commons. This will be one app with different modules/accounts, all interoperable".


==== Credit Commons Society ====

The [Credit Commons Society](https://creditcommonssociety.org/) (CCS) has been set up to to foster an ecosystem of groups and networks supporting the Credit Commons, and will be involved in its governance. You don’t want the same people running the system and providing governance oversight. A body with experienced 'elders' will provide governance. It's intended to function as a foundation (like the [Linux Foundation](https://www.linuxfoundation.org/), for example, or in the case of the chess analogy above, like the World Chess Federation), helping build a global Credit-Commons-enabled economy.

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![](http://lowimpactorg.onyx-sites.io/wp-content/uploads/credit-commons-white-paper-1.png)

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_Matthew Slater and Tim Jenkin introduced the Credit Commons Protocol via a [White Paper](https://creditcommons.org/assets/credit-commons.pdf) in 2016._
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===== Forum =====

This topic belongs to the section [[gt:economy|Economy & finance]]. You can ask questions or add information on the corresponding [Forum section](https://forum.growingthecommons.org/t/economy).

===== Further resources =====

- Tom Greco, _[the End of Money and the Future of Civilisation](https://beyondmoney.net/welcome-to-the-new-2024-edition-of-the-end-of-money-and-the-future-of-civilization/)_

- [Credit Commons Protocol](https://creditcommons.org/)

- [Credit Commons Society](http://lowimpactorg.onyx-sites.io/posts/introducing-the-credit-commons-society/)

- [Credit Commons documentation and repository on GitLab](https://gitlab.com/credit-commons/credit-commons-documentation)





===== Related topics =====

- [Mutual credit](mucr:mutual_credit)
- [Commoning](comg:commoning)
- [Commons economy](coec:commons_economy)
- [Use-credit obligations](ucos:use-credit_obligations)
- [Collaborative finance](cofi:collaborative_finance)
- [ROSCAs - rotating savings & credit associations](rosc:roscas)
- [Housing commons](hoco:housing_commons)
- [Credit clearing](crcl:credit_clearing)


===== Specialist curators of this topic =====

  * [[user:matslats|Matthew Slater]] of [[https://creditcommons.org|CreditCommons.org]]
  * [[user:mrauchs|Michel Rauchs]]
  * [[user:dil|Dil Green]] of [[https://www.mutualcredit.services/|Mutual Credit Services]]