What is the ‘WIR Bank’
The WIR Bank is a complementary currency system based in Switzerland that serves local businesses. The WIR Bank specifically works with small and medium-sized businesses, and allows these businesses to circulate their inventory through the WIR Bank’s bookkeeping system in order to maintain sales volume. It allows inventory to continue to be exchanged even during times in which currency cannot be accessed. Businesses have to be members of the organization in order to participate.
BREAKING DOWN ‘WIR Bank’
Werner Zimmermann and Paul Enz founded WIR Bank in1934 as a response to the lack of available hard currency in the wake of the stock market crash of 1929. WIR Bank received its banking license in 1936. Wir is short for Wirtschaftsring-Genossenschaft or “economic circle,” the bank’s former name in German; wir also means “we” in German, so that the name is an intentional reminder that the bank constitutes an economic community. WIR Bank was initially founded as a non-profit institution according to the free money theory of Silvio Gesell, the German libertarian socialist economist. However, in 1952, WIR Bank renounced this theory, and began to generate profits from interest-bearing activities as it expanded.
Originally founded with only 16 members, today the WIR Bank boasts more than 62,000. It holds assets valued at 3 billion CHF, and tallies annual sales worth 6.5 billion CHF, as of 2005. In 1998, the WIR Bank’s credit system held 885 million CHF in assets, and 844 million CHF in liabilities, leaving equity in the system of about 45 million CHF. It earned income from credit clearing activities and interest totaling about 38 million CHF. WIR Bank works primarily with small-to-medium (SME) businesses in the manufacturing, hospitality, construction, professional services and retail industries. It serves as a business-to-business closed loop payment system, allowing businesses to conduct sales transactions without the need to use Swiss Francs; however, WIR Bank often facilitates dual-currency transactions in which both Swiss Francs and WIR are used.
WIR’s Effect on the Economy
Research by James Stodder has found that WIR stabilizes 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.