The rise of Sardex

di Gian Paolo Lazzer

Recent economic crises have created rifts in western societies, which are now obliged to redefine old economic practices and, in the same time, to design new ones. Relationships between people and money are not exempt from this upheaval, good or bad. Many new forms of money are developing and emerging from economic crises. The Sardex is one of them. The Sardex scheme was created in Sardinia in 2006 as a start-up by Giuseppe Littera, Gabriele Littera and Carlo Mancosu, three young and unemployed graduates (oddly not in economics). It is no coincidence that they were inspired by the Wir, an alternative currency created in Switzerland after the crisis of ’29.

Born as a little firm, in June 2012, there were more then one million Sardex in circulation, and this number is growing very fast. Each Sardex is worth one Euro. Almost 800 firms participate in the Sardex programme. But how does it function? What are the reasons for its success?

This money aims to improve local commerce which have been struggling because of both global, local and national economic problems. The Sardex is a monetary network that connects various businesses – at the moment it is trying to open to private citizens – helping them to exchange services and products without using Euros or other state currencies, and outside the limits of barter. The network lends Sardex credits to firms as bank credit, but with no interest. Creditors have to solve their debts within twelve months from the loan. Thus far, all firms that have used Sardex credits to manage cash flow problems have resolved their debts with the Sardex scheme.

If a firm is in financial trouble, other firms may offer assistance buying their products or services. As an extrema ratio the firm could pay debts using the Euro. Up to now, all the firms have solved their debts using only Sardex credits. So this market is “euroless” and no actors should gain more money then they received. The Sardex scheme is a complementary market because its aim is to extend firms’ business. It doesn’t work inside the ordinary market but, as a small network, it partially depends upon it. The firms, which want to join the network, have to pay a registration fee and an annual subscription in Euro.

The Sardex is a hybrid form of money: it is an e-money and it is a local money used only in Sardinia. Thus Sardex credits are not a currency and they don’t compete with the Euro (they didn’t have any problems with Banca d’Italia though). Unlike the Euro, Sardex credits have a very specific function: supporting local businesses in Sardinia. The question is: how are Sardex credits a form of money? We could say Sardex credits are money because people believe in them and because people have trust in the Sardex system. That’s an easy answer but as a sociologists we should want more. The president of the project, Gabriele Littera, thinks that the strength and the reason of the success of Sardex lies in people’s confidence in the network : “We don’t have an algorithm, just relations, our brokers try to help who is in trouble suggesting them new businesses. Technology is an aid.”
He underlines the communitarian aspects of the Sardex but we said that trust is not a sufficient explanation. We must also take into consideration the technologies that permit the circulation of this form of money. Sardex credits are not just a simple instrument. They are part of a socio-technical and economic system. Indeed, if we disconnected the servers that manage Sardex transactions, it would be the end for the project.

But we can go further, and ask what problems endanger monetary networks like Sardex?

The first issue is preventing opportunistic behaviours that could undermine trust. The use of Internet mainly solves the problem because every transaction is public and nobody can operate anonymously. Transparency is useful also for the public finance because tax evasion is impossible inside Sardex scheme. Furthermore, the web can produce a sort of community memory: the Sardex, unlike currencies, doesn’t have juridical and legal bodies that prevent and punish bad behaviours. It needs a high level of transparency for the transactions and only a proper use of Internet can offer this service.

The second problem concerns what goods the network can offer. It has to be balanced and adequately extended otherwise the deficits would render the network’s participation unprofitable. Again a proper use of the technological support solves the problem. The web allows a constant exchange of information among the users and, in the same time, the brokers who manage the network could work on the basket of goods. The supply of services and products is public and brokers can pinpoint every deficit.

Trust is not inspired only by the group identity –being Sardinian- or by the relation with the brokers but it is produced also by the technology that transmits fundamental information. Networked technologies are not only an instrument. They are an important part of this kind of money. There is a relationship of agency between all the actors involved in the network and the technological infrastructure. Citing Keith Hart: “Then money could take a variety of forms compatible with both personal agency and human interdependence at every level from the local to the global.” 1 We already know that technological impact is very important in modern financial markets, for example we can think about the hedge funds and their powerful servers. 2 But what I would like to propose in this brief reflection is that the technological development must be taken into consideration even when the research field regards small monetary networks and even where the group identity seems to be the most important element. Not infrequently the opposition between community and global society, barter and financial trade are based on the same infrastructures.



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