WIR: for a monetary biodiversity

Dimitri Touren, translated by Romane Thomas Belikov
16 Septembre 2016


The WIR Bank is a Swiss bank located in Bâle and founded in 1934. Operating under the control of the National Swiss Bank and officially recognized by the World Bank, the WIR Bank takes on the same role as a central bank by creating WIR money, a private currency used exclusively by a network of 60,000 Swiss SMBs in parallel with the official currency.


Photo credit : Taxcredits.net
Mechanisms of currency creation are common after crises and wars. Bretton Woods in 1944 after World War Two, the Bank of England in 1694 after the war against France… The establishment of the WIR came after the crisis of 1929. Investments were stalled, bank credits at their lowest and company profits non-existent. Silvio Gesell and Werner Zimmermann then decided to create an interest-free currency reserved for Swiss entrepreneurs to fight against the concentration of wealth and capital flight. Its popularity rose and the bank was legalized a year later.

Today, 60,000 Swiss SMBs use the WIR – convertible into Swiss francs – for a part of their transactions. They represent around 20% of local SMBs and allow for the creation of economic relationships between agents that might not necessarily have worked together. Due to the lack of interest on WIR assets, keeping them or investing them is not sensible. On the contrary, holders are interested in spending them, and fast, because inflation on the Swiss franc depreciates their value – although it so happens that the Swiss franc has a propensity to depreciate since the last crisis.

Breaking the monopoly of monetary creation

Put into the spotlight recently by the movie Tomorrow by Cyril Dion, the WIR is depicted more as a complementary currency rather than an alternative. In fact, its users do not abandon the Swiss franc. Nevertheless, they favor the WIR for their common exchanges. It is the logic of taking into account mutual interests that allows the users to pay – often partially – in WIR. If a Swiss entrepreneur member of the network decides to go into a ski resort that is also in the network, he can pay 50%, 60% or even 100% of his room, in off peak seasons, when the demand expressed in euros, dollars or Swiss francs is at its lowest.

Photo credit : Flickr / Gerard Touren
Thus, the WIR allows the maintenance of local activity. It could even boost it after a crisis since it supports the activity of the network in which the members are the only users. The region of Sardinia, in Italy, which has been using a similar system since 2009, the Sardex, was able to reinforce the local economy that Rome had abandoned. Just like with the WIR, the Sardex is used by SMBs on the island and allows the maintenance of local activity by instigating a sort of neo-barter. The Sardex, like the WIR, allow SMBs to maintain their activity without suffering from a lack of liquidity due to the slowing of the national and European economy and thus they do not risk seeing their activities stop altogether. It is a form of insurance for their profits and thus for local jobs.

The other advantage of the WIR is that it is (almost) free and easy to access. Interest rates for loans, originally non-existent, now exist but remain at less than 1%. This limits the debt of the borrowers and the concentration of wealth. In fact, traditionally, when a government borrows, it creates a debt whose price it must pay: the interest rate. Whether high or not, these rates reward the risk taken by the loaner - the one who has enough money to give away a portion of it for the transaction and who is looking for a final profit. With interest rates, we therefore see a concentration of wealth in the hands of the loaner, the investors and the “markets”.

A model like the WIR could prove to be pertinent in the case of the Greek crisis. Next June, just like last June, an aid plan will be imposed on Greece – with a risk of a similar success. The injected capitals, if they are in euros, will rapidly move out of the country, like they have done every year since 2009. However, a complementary money like the WIR – one that could be adapted to a region or an entire country rather than SMB’s – would allow the revival of local activity, in terms of supply just as much as demand. That doesn’t mean that Greece would exit the euro. The cohabitation of two currencies, which at first look is risqué, works well in Switzerland and in Sardinia but also in the United Kingdom, where many companies largely trade in euros with their continental partners.