by Rein van Gisteren*
How this circulair money system works?
For instance, a painter pays for his new laptop in WIR. His supplier buys from the sale a bunch of flowers for his partner.
And the florist has his shop door painted from the daily yield so that after payment of his invoice the painter can purchase an accounting program on his new laptop.
And the payment circle is closed. The trade name 'WIR' comes from Wirtschaftsring - economic circle - and WIR also means ‘we’ in German.
In addition to being a banking institution, the cooperative bank is also a network of entrepreneurs.
It is an economic community for payments and loans but also a forum for contact between its co-operants.
The Swiss WIR, exploited by the WIR Bank, is a cashless payment method; especially popular among small and medium-sized enterprises (SMEs).
On the door of a Swiss shop, restaurant, hotel or other business, is often announced with a sticker that you are dealing with a ‘WIR partner’.
One WIR has the value of one Swiss Franc. The 'cashless payment method' is not very well known outside the Alpine country. This is mainly because the virtual currency can only be used domestically if both the buyer and the seller have an account with the cooperative bank.
The WIR is a giro settlement system: WIR Bank administrates every step in the payment cycle and, just like a credit card company does. The WIR card also includes a function to be able to pay abroad via V-Pay.
Actually it is a debit card, because you can only spend money if there is a value from the real economy on your account.
Solidarity and trust are the most important assets. The WIR calls itself 'the largest alternative currency in the world'. In the past 80 years, the virtual currency WIR has been functioning as a supplement to the regular Swiss franc.
The WIR works as a mutual calculation unit for about 60,000 customers, most of them are SME’s. The system has also been working for individuals since the beginning of this century, providing them also membership of the cooperation.
Because of its size, the WIR is seen as one of the statements of the steadiness of the Swiss economy. The WIR was created during the peak of the economic crisis in 1934 when there was too little money in circulation.
The payment system continues to flourish after 80 years.
The use of the WIR is reportedly resulting in higher turnover, cash flow and profit for the customers of this bank. The WIR Bank and its alternative money circuit have proved to be resistant to economic recessions over the years.
Due to its way of working, there would even be a stabilising effect of the WIR system on the local Swiss economy. With economic prosperity, the WIR system shrinks and people use the ordinary Swiss Frank more often.
The transactions are administrated at the head quarters in Basel. Besides a large accounting system, it is also a transaction guarantee. It promotes buying and selling among participants within an economic cycle of SMEs and stimulates you as an entrepreneur to first use your self-earned WIR for paying an account and only then your cash or other assets.
Through its existence, the WIR makes a valuable contribution to a healthy and stable national economy. In times of economic downturn, SMEs offer the certainty that they are paid and that they can pay. The seller can dispose of the balance immediately after each transaction.
Website Investopedia writes: “Research by James Stodder has found that WIR stabilises the economy by creating a countercyclical tendency. During financial crises, when conventional means of currency become less available, WIR currency becomes more available.
Therefore the existence of the WIR network protects SME businesses from some of the worst effects of economic downturn. The WIR Bank funds its currency by imposing fees on every transaction it facilitates, as well as by collecting interest on loans and overdrafts.”
Companies will not execute all their transactions in WIR because, for example, salaries for employees and taxes cannot be paid in WIR or because not all suppliers accept the currency. WIR is therefore a complementary currency. Your bank credit can not be exchanged for cash; whoever does so is excluded.
Oliver Willimann, President of de WIR board of directors, says in a press release of the bank after a bank meeting in May 2018: "As a co-operation, we are not committed to maximising profits, we offer fair conditions for our banking products and we are committed to equal opportunities."
And further: "The WIR system to strengthen the Swiss SME economy will be further developed. With our WIR system, we have a unique product that many countries are envying.”
The WIR head quarters, with approximately 280 employees, are located in Basel; branches in Bern, Chur, Lausanne, Lugano, Luzern, St. Gallen and Zurich. The balance sheet of WIR Bank shows roughly CHF/CHW 4 billion (€ 3,5 billion).
According to the rules of the bank, the purpose is to encourage members to make their purchasing power available and to promote traffic within their own ranks, thereby benefiting members from additional sales.
*Communication consultant & Member of NewB in Belgium.
By: N. Peter Kramer
