The notion of debt in mutual credit systems: some insights from the experience of Moneda PAR

This article explores complementary currencies (CC) that work on the basis of community credit schemes in Argentina, a country often referred to as a laboratory in terms of monetary exploration. In contrast to alternative community-based monetary systems created in the global North, CC developed in the global South usually pursue the creation of supplementary currency circulation in order to address liquidity constraints faced by the middle and low strata of the society. In particular, CC relying on community credit schemes solve two problems at once: liquidity constraints and credit scarcity. Drawing on the case of Moneda PAR, a mutual credit system originated in Argentina in 2017 upon the principles of the social and solidarity economy, we study how users understand debt.
The last quantitative data obtained from Moneda PAR show that only around 20% of the participants have a negative balance; that is, they have effectively used mutual credit. Thus, a large majority of users do only count on the liquidity obtained from their own sales. These figures seem to be in conflict with the theses on which the complementary monetary systems in peripheral countries are founded and, in particular, with CCs that work based on mutual credit systems. Given that, in these systems where money is created by granting credit, a generalized reluctance of the participants to take it could end up being self-defeating, as eventually low levels of liquidity would prevail making the whole system unattractive.
In this paper we intend to investigate the reasons why the participants of Moneda PAR tend to refrain from using the credit facility. Our working hypothesis is that the meaning of debt, both in its symbolic dimension and in the power relations in which it is embedded, may be driving Moneda PAR participants’ behaviour, especially those of lower income strata, thereby limiting the capacity of the system to foster the markets where it is used. While the results of this article are useful for Moneda PAR, they can also be extended to mutual-credit complementary monetary systems built on the premise that credit scarcity constitutes an obstacle to the improvement of the material conditions of a community.