[SSE Organisation Review] - Case of Sardex (community currency)

SSE Organisation
Social Finance / Impact Measurement
Future of Work / Technology

Sardex is an innovative online community currency platform (B2B mutual credit) emerged in Sardinia, Italy, in the aftermath of the financial crisis 2007/8 which negatively affected the small island population with 1.6million. The local economy was devastated as credit conditions severely deteriorated, notably credit to households and SMEs. Further, the banking sector reduced lendings to families and local enterprises, and they all went hand and hand with the rapid GDP drop and soaring unemployment rates.

Sardex was created to offset these negative impacts of economic recession in the region through virtual Sardex platform, and it successfully boosted the deteriorated local economy, as evidenced by it's 3,200 local SMEs (Small and Medium Enterprises) memberships and 51 million euros in their reciprocal transaction volumes. The basic idea was that once enterprise members joined the Sardex network, they extend each other credits (euro denominated currency), thereby businesses start to trade each other through Sardex credits (1 Sardex credit equivalent to 1 Euro) and in the process, Sardex company does not charge any transaction fees or interest rates for issuing the credits but annual flat membership fees depend on the size of enterprises.

Local enterprises through Sardex credits can exchange and direct goods and services that are surplus for certain enterprises to where there are demands without using single euro. One of the benefits of Sardex credits is that it inherently promotes local economy as transactions largely remain in the region and promote efficient use of local resources. Moreover, enterprises can help other enterprises in financial difficulties by purchasing their products and services through Sardex based on a trust in their community.

According to Giuseppe Littera et al. (2017), one of the most important reasons for its success in revitalising the local economy is due in part to the social trust and solidarity among local enterprises that are community-specific and based on reciprocal expectations. Now the case is being benchmarked by other municipalities throughout Italy, and they are currently working on transferring the initiative into their cities. According to DW news article, it is now getting attention from countries from around the world such as Brazil, Croatia, the UK and Catalonia.

Also, check out another overview by BBC World Service here

If we interpret the emergence of traditional forms of Social and Solidarity Economy (SSE) in different continents such as in the UK, Basque, Bologna and Quebec as a reaction (in Karl Polanyi’s term ‘the double movement’) to the inherently market centered capitalist system and subjection of society to the market, also subsequent economic and social upheavals (as observed throughout the industrial revolution period, wartime economy, oil shock and great depression) which damage the cohesion of communities and social fabrics, more recent phenomenon could be the financial crisis in 2007/8 as the SSE has been emerging and increasingly getting attention again as an alternative to remedy the capitalistic ways of structuring the economy and society.

One may argue that more modern form of SSE is emerging as a reaction to that, in the context of the digital revolution that concerns some public about the possibility of increasing inequality it may bring about. The case of Sardex in principle, may not new but the way it leveraged the online platform to realise the core values of traditional forms of mutual credit with a more modern interpretation (and of course it is a local specific) is an innovative approach. Also, another form of collaborative economy and the utilisation of cryptocurrencies (for those marginalised who do not have access to established finances) may deserve more attention in the era of digitisation.

To find more about Sardex, please visit its homepage here and you can also read a more academic analysis about Sardex, its implications with regard to the other types of community currencies such as WIR/LETS here (Journal of Community Currency Research 2017) ‘From an idea of a scalable working model: merging economic benefits with social values in Sardex.