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C3: Consumer Commerce Circuits

C3 is a network of independent companies with an internal accounting system where digital units are transferred when transactions between members are realised. Just as in barter-networks no conventional money is needed for these transactions. An important difference between C3’s and Barter Networks is the inflow of consumer money in the C3 network, which permits the (total or partial) convertibility of Internal Units into money, under reduction of a fee.

The exchangeability of the units are guaranteed by a financial institution. Since there is always a lot of units circulating in the system, an abundance of cash is stored in the bank, which can be made available for a low-cost credit program (in money) to finance investments by the member companies.

liquidity tax and bonus
In order to create a strong system which has an internal dynamic, the C3 method uses the following two instruments:

  • a charge on positive balances (“demurrage” or “liquidity tax”) to stimulate and accelerate transactions within the system. Positive balances are taxed with a 1/30% liquidity tax per day. The liquidity tax not only accelerates the circulation of the Internal Units, but also generates an income for the system, that provides the money for extra Bonus, to pay for professional staff, to reduce the risk premium on loans to members and/or to finance community projects.
  • A bonus/malus system: Consumers buy the Internal Units gaining extra Units as a bonus. This bonus attracts the inflow of money. The Bonus is funded by using a “malus” that will be charged to whoever converts the Units back to money and by the liquidity tax. Because of the Malus members prefer to spend locally if the extra costs are not higher than buying outside the region.

Returning purchasing power
One of the structural malfunctions of present day' s monetary system is that it does not provide consumers with the signals or incentives about the chance that their purchasing power have to return to them, as employees (salary) or entrepreneurs (sales), for instance. In other words: for the individual consumer it might be attractive to buy external goods, but for the local economy as a whole (including the consumer) this purchase will be harmful, because money (purchasing power) drains form the community. A C3 system does give these signals. This is explained more in detail in the example of buying a local tractor or an imported tractor.

C3 international
C3 provides the possibility to allow international trade between C3’s, even in different countries. To avoid the same effects of under-use of potentials in weaker regions these (interC3) transactions are subject to rules which are highly similar to those proposed by Keynes’ in 1944 in Bretton Woods to organise the world trade optimal (he called this the Bancor-concept). These rules allows every nation to optimize their economy.

C3 in practice
Currently STRO researches C3 pilots in a great diversity of situations and also with diversity in methodology:

  • RET : In San Salvador, the RET is a network of more than 100, mostly informal micro- enterprises that partly trade in Internal Units, called UDIS. The RET-network is still much similar to a conventional barter. The monthly turnover is of course small, but doubling every half year. More info...
  • CompRaS: In the southern state of Brazil, Rio Grande do Sul (RS), a system with the name CompRaS has been set up. The CompRaS Association is the core organisation in this project. An important partnership has been achieved with Banco do Brasil, both at central and local level. The Guarantee Fund of RS covers the risks of internal loans in the formal currency against a cost of a one time 1 and ½ percent. In June 2005, the first 50 companies became member of the network. More info…
  • C3 Paraná: In Paraná (Southern Brazil) a Local Exchange Circuit is created to address the housing problem both for the benefit for the homeless as for the civil construction sector that has a serious problem of unused capacity. More info……
  • Tobias Barreto: Tobias Barreto is a small city in the Northeast of Brazil that uses its own currency: the ‘Topaz’. The city council of Tobias is going to convert Reais into Topaz through payments of salaries and social welfare and spending at local companies. The people of Tobias can spend the Topaz at local companies. The city council will bring continuously Topaz into circulation, making the economic impact of the project permanently. More info…
  • The Netherlands: In the Netherlands a group of young Muslim-entrepreneurs are working towards a non interest mortgage starting form an internal C3. The inflow of consumer money will be lent without interest to participants in the network.
  • Poland: In Poland a C3 is in preparation as the result of the co-operation of Polish initiators, STRO and TurkBarter (a Barter company in Turkey with a turnover of over 200 million dollar). Private investors were found to cover initial costs.

C3 school
EBBS is the first business school that works with the Barter concept. The entrepreneur develops with EBBS a C3 trade network and takes the title of Bachelor or Master.