The Macro-Stability of Swiss WIR-Bank Credits: Balance, Velocity, and Leverage
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Since 1934, the Swiss Wirtschaftsring/Cercle Économique (Economic Circle), now the WIR-Bank, has issued its own currency, not backed by Swiss Francs. Turnover in WIR is countercyclical: firms use it more in a recession. A money-in-the-production-function model implies that this spending arises through larger WIR Balances for larger firms, but greater WIR Velocity for smaller ones. Panel data by industrial sector confirm this pattern, similar to commercial trade credits, a major source of non-bank credit. The countercyclical multiplier on WIR expenditures is highly leveraged, and its impact on the Swiss Economy greater than its turnover would suggest.
Keywordscomplementary currency community currency countercyclical
JEL ClassificationE51 G21 P13
We wish to thank Stefan Winkler, a statistician for the WIR-Bank, for his generous aid in providing and interpreting WIR-Bank sectoral data. Thanks also to Peter Pedroni, David Giles, and seminar participants at the Centre for European Research in Microfinance, University of Brussels and the International Conference on Community and Complementary Currencies, University of Lyon. They are in no way responsible for any errors.
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