Currencies

Sardinia: recovery without Bank interest

Sardex is a regional lending club for small and medium-sized enterprises on the island of Sardinia. The members help each other out of the crisis – with success. Now the System is to boost the whole of Italy the economy.

The face of Giuseppe Littera shines bright when he speaks of the story of his Start-ups: “It was our Vision to allow here at home, economic prospects,” says the founder and managing Director of Sardex.

A long time the economy of the island of Sardinia was broke, especially the well-educated people migrated. Sardex should bring the economy back to life. As a club for smaller and medium-sized enterprises (SMEs), Sardex members the opportunity to make interest – free transactions with each other without cash. The Inspiration for the business model they had to the Swiss economy ring-a cooperative, We brought explains Littera.

So the model works

Members of Sardex receive access to an online platform. There you can find offers and requests about products and services of other members. The members pay each other based on Credit, in the so-called “Sardex credits” and not in cash. The loans work so, actually, as a regional currency.

Giuseppe Littera 2.v.r

For example: A dentist, a grocer and a carpenter are all members of Sardex. The dentist treats the teeth of a carpenter. For this, he gets Sardex credits are credited. At the grocer, he can go shopping. And the grocer paid in Sardex credits back to the carpenter for the new shelves in the Store. Thus, the loan is closed circle. Several transactions were made, without anyone had to use hard Euros, or the checking account has been charged.

“In the course of a year, each Sardex-member to use his credit account balanced for purchases and sales, thus it fluctuates over the long term to the Zero,” explains Littera. “This is necessary for the System to work.”

Each member negotiates with Sardex a high and a low level of credit volume; within this range may move and then be Sardex account. In addition, the Credit and the transactions of each member on the account. This is, in turn, to view at any time for all members on the online platform. “This creates transparency,” says Litterateur, “and therefore trust. This is important.”

Sardex has a Team of intermediaries, the every day sitting at the Computer, and the accounts of the members to comb through to look for business opportunities and potential transaction partners. In Sardex has received detailed insights into the Sardinian economy, and could also identify new business opportunities. The company has been also working as an economic Advisor to the Sardinian government.

Beginnings and Expansion

At the beginning of the year 2000, Littera, and some friends from the small town of Serramanna made to establish a credit circle for SMEs on the island of Sardinia. Money they had as good as none – only the idea of and a long breath.

After a clumsy Start, the Start-up grows-up for three years. The first member of the circle was recruited in 2010 – today, more than 3,200 Sardinian small and medium-sized enterprises are members of Sardex. In the meantime, Littera rejects more applicants than it can accept. As for the Credit, it is important that it includes a balanced number of different Goods and services.

Sardinia lives mainly from tourism

“We will manage in the long term, approximately 10,000 members. That would be about ten per cent of the SMEs on this island,” says Litterateur. In the year 2015, transactions in a total value of 51 million Euro in Sardex had been made credits. The majority of the volume of course but a very active minority of about a quarter of the members.

The business model of the company is simple: members pay an annual contribution in Euros. Small businesses pay a few Hundred euros, larger up to a few Thousand. There are no other fees – no transaction fees.

Departure in other regions

Moreover, Sardex is now transferring the business model to other parts of Italy. The company is on a course of expansion. So have been added in the past two years, ten other regions of Italy. The credit circles organize themselves independently of each other. “We need about 600 members in each Region, in order to reach the profit zone,” says Litterateur. “The challenge is to secure for the first time this number of members, because, for the Parties to a participation results from of this size.”

In April Sardex received three million euros in external capital. Thus, the Expansion of the business model in other regions. The Italian state has invested in Sardex. A sign that Italy’s recognition of the stimulus effect of the model.

Meanwhile, requests from Spain, Croatia, England and even Brazil. “Our style is the company is very careful and methodical to expand. We promise less and deliver more,” says Litterateur. “But I think in a few years we will be venturing outside of Italy.”

Limits of what is Possible

Of the many, diverse members, meanwhile, can be shops of almost every kind on Sardex-credit basis. The VAT and income tax must flow to the state. The members are not able to only make transactions among themselves. Because otherwise you will not come to the normal Euros, because the state does not accept Sardex credits as a tax payment.

Therefore, the members must do also with non-members transactions, in order to come each month to the necessary capital to your tax obligations. Therefore, the company recommends to the members, more than about 20 percent of their business volume on Sardex-to-let loans run.

“If the state would be willing to Sardex-accept credits as a tax payment funds, would rise for us a very big door,” says Giuseppe Littera. Then the members could make unlimited transactions in Sardex credits. “Only that will happen.”