Zero-interest credit facility? How does it work?
The CELYN system’s books, of what’s borrowed and bought, always nets out at Zero. The system as a whole doesn’t go into the red, therefore it can avoid charging interest to its members.
How will CELYN sustain itself?
After the pilot period, where CELYN is free to join, a small annual fee or % transaction fee will be charged.
What about taxes?
Taxes have to be paid in GBP. If the item required a tax payment, then that portion is paid in GBP in the normal way. That’s why CELYN will allow blended transactions, half CELYN / half GBP so that a business can benefit from the extra liquidity CELYN helps create without missing GBP cash when needed.
How do I use CELYN in my business accounts?
CELYN is easily integrated in your business accounts as another method of payment or line in your balance sheet.
Can I leave without paying off my credit facility?
If you leave overdrawn, the exit fee is equal to your credit balance and will need to be settled. If you leave with a positive balance, you will have twelve months to spend the remaining balance before your account is closed.
What do I use this local currency for?
Minimise cash out to local suppliers, purchase new goods or services without spending cash. Treat your team to local perks without footing the bill in pounds?
If a business you currently work with or want to work with is on the network, you can keep your cash in the bank while still purchasing from them using CELYN.
Is it like barter?
‘Mutual Credit’ is different to barter because you have a balance in the wider CELYN membership to spend with anyone with listings in the marketplace. Your own listings can be bought by anyone in the CELYN membership. It’s not a direct swap like barter.
Is it like Bitcoin?
It’s not like Bitcoin because you don’t need to buy into the currency first. You just join CELYN and receive your zero interest overdraft to increase local spending power and boost your liquidity.
Do these systems fail?
Many ‘convertible’ systems, backed by conventional currency, have indeed failed, i.e. systems where you can buy local notes with conventional notes, done as a ‘pledge’ to spend local whilst at the same time initiating a continued circulation of those notes within the community. When money becomes short during downturn, people cash them back. Just when a cushion is needed, the system begins to shrink. CELYN is a ‘Mutual Credit’ system and doesn’t have this problem because their not convertible.
Do national banks have an issue with Mutual Credit?
As long as it’s not convertible, e.g.. 1. taking pounds off customers, 2. keeping them safe and accounted for in a bank untouched 3. issuing local notes in their place. In this scenario the local notes are ‘backed’ by GBP. This activity is banking activity and requires regulation.
Mutual Credit doesn’t require regulation by the FCA because it’s not GBP. Whilst it’s equal to GBP, i.e. what they call ‘pegged’, and has the same spending value within the membership, it operates as an IOU. An IOU for goods with the promise of settling in other goods, stands outside of the regulation and as such, can get to work right away without needing banking licences.
Is this an ‘alternative currency’, threatening the pound?
No. It increases GBP liquidity for small businesses as they avoid dipping into cash reserves for everything. Also, the Swiss ‘WIR’ hasn’t done the Swiss Franc any harm, to the contrary! This is why ‘Mutual Credit’, such as the CELYN, is referred to as a complementary currency system
Is the CELYN just for green converts?
Reducing the distance of supply chains is certainly a benefit of a geographically restricted complementary. However, the business case social case as well as environmental are as strong as each other. Also, in countries where Mutual Credit operates, support cuts across party political lines due to its broad appeal. Finally, the CELYN eventually being able to offer credits to businesses, employees and consumers, as is the case with the Sardinian Sardex now, also helps keep everyone on board.
What’s the process for joining the CELYN?
Go to the website (live at the launch). Step 1: register. CELYN then checks you’re a legitimate business and trading ethically. Companies House is checked to see if there are any major issues. The size of operation is divided by ten percent, i.e. the average ‘spare capacity’ of a business and a credit line in ‘CELYN’ is offered at one quarter of that.
What size of transactions are made?
Transactions are relatively small, up to a few thousand. When SME’s get accustomed to the system, their activity never usually exceeds 10% of the transactions they do. Mutual Credit however is a valuable cushion, sometimes making all of the difference
Who is running the CELYN pilot?
Circular Economy Wales CIC. After the pilot, activity will be managed by CELYN CIC, a separate company.
How did CELYN come about?
The whole background can be found on Circular Economy Wales’s website where the ‘Circular Wealth Wales Report’ can be downloaded.
Who can join?
Whilst the CELYN will try and create a bit of a buzz in Wrexham, utilising the convenience of interconnecting networks in one place to build up support; businesses from any part of Wales will be able to join from day one.