Frequently Asked Questions
Can we just “make our own money”?
Yes. Mutual Credit currencies exist all over the world. For example, there is a very successful currency in the English city of Bristol . In Switzerland they have been doing it for 80 years. It has helped an Austrian village to quickly get out of a depression. It is a question of mutual agreements. You can simply agree that one Fair Money is worth one Euro, if that is the case in every store. Then it is actually the same as paying with Euros, but then more fun. And cheaper.
Is the Fair Money legal?
Yes. Our system is based on the Dutch “Florijn” mutual credit currency. Thus, this system is already up and running in a Eurozone country. According to The Dutch Central Bank, the working method is not in conflict with the Financial Supervision Act (Wft). At the same time, Fair Money is not a legal tender, such as the Euro. We think this is a plus, because the definition of legal tender is that you are obliged to accept it. Acceptance of Fair Money is of course not compulsory, it is voluntary. Nobody is forcing you.
What is the difference with a bank?
The big difference is interest. In essence, banks create money to earn interest. Fair Money Foundation creates money to facilitate trade. We only carry out the accounting tasks of a bank, in return for a small monthly fee. This fee is paid only by those members availing of interest free credit (the businesses). No fees at all for consumer members. Fair Money is operated on a non-profit basis.
Why is interest so damaging to an economy?
All money is created as a loan. When banks lend money, they create that money on the spot. That’s fine. This is how money should come into circulation. However, the interest owed on a loan is not created by the bank. So there is never enough money in circulation to pay off all loans. This shortfall creates a rising mountain of unpayable debt, and leaves us in an impossible game of musical chairs, where we have to try not to get caught out during regular collapses of the credit system under the burden of unpayable debt. (for example, 2008). An easy way to see this is when borrowing to buy a house. The bank creates say €300,000 as a loan. The home buyer has to pay that over 30 years, at 4% interest. The total amount repayable is €515,000. The €300,000 loan is created and in circulation. The €215,000 is NOT created by the loan, and only comes into existence if someone else borrows for another home. Which of course just creates a debt bubble, and more problems.
How does Fair Money solve this problem?
In a nutshell: there is money shortage, so we make our own money. By making interest-free credit available, we create an extra flow of funds (in addition to the Euro) that facilitates trade. This offers entrepreneurs a huge amount extra liquidity. In addition, Fair Money continues to circulate within the network, instead of leaking to the banks (in the form of interest).
Who provides the credit?
The entire network. There is actually no one who lends money. The network relies on the promise to repay a loan and the foundation only keeps track of the administration. We ensure that not too much credit is spent and that everyone keeps to the agreements, but we do that to help the participants, not to exploit them. The credit does not come from the foundation and could not exist without the participants. That is why everyone is eligible for credit in principle. Interestingly, the bank credit system is very similar. Banks do not loan you their money. They create money by issuing credit, based on ability to pay. Credit really is a function of all of us accepting the spending power (or money), based on our trust or belief in the ability to pay of the person receiving the credit. In fact credit means Creditio, I believe. In a banking system, the bank performs the book-keeping, but charges a huge price, called interest. In a mutual credit system, the book-keeping is similar, but there is no interest charged, for everyone’s benefit.
How does the Foundation earn money?
Companies pay F 10, – per month participation costs. That is the equivalent of €10 per month. And for that the business gets access to interest free credit, which they can use over and over again. By the way, every new business joining can avail of a one year money back guarantee. If they are not happy the €10/month fee will be waived. This small fee from the businesses will be enough to pay the running costs of the system.
How does Fair Money change hands?
Entrepreneurs can sell fair Money that they can not issue at the Exchange Office. For a maximum of 0.95 cents. Demand for Florijn is guaranteed, because 1 / 12th of the outstanding loans have to be repaid each month, and that must largely come from the exchange office. But there are always individuals who buy Fair Money.
Why should I participate?
For small and medium-sized businesses, the benefits of the additional liquidity that interest-free loans provide are likely to be clear. However, there is also a reason for the consumer to pay with Fair Money. Due to the operation of the exchange office, a consumer pays a maximum of € 0.95 per Fair Money, resulting in a discount of at least 5% on his groceries.
Who pays that 5% discount?
As long as Fair Money keeps circulating in the network, nobody pays for it. Only when an entrepreneur offers his Fair Money for sale for a maximum of 95 Eurocents does he lose at least 5%. These Florins, however, are extra revenue with some certainty, as is evident from experiences with literally all other complementary currencies. That 5% actually comes from outside the network. Anyway, the entrepreneur is encouraged by this construction to spend his Fair Money within the network.
What is the catch?
That is not there. Fair Money is a simple means of exchange, without inflation or deflation, always sufficiently available and above all: without interest . The absence of interest changes everything. We can not emphasize it enough.