Economies all over the world are going to need a lot of support from central banks in order to be able to recover from the COVID-19 pandemic, which has caused a lot of hardship and economic slowdown globally. The various lockdowns enacted globally have throttled growth and business development, and so support is likely to be needed for some time to allow economies to get back on their feet. There are various interesting policies and ways that central banks are exploring to get this done, since traditional methods have begun to lose their efficacy, and the example of Wales is quite interesting in this regard.
Wales launched a complementary currency, known as Celyn, in December, in a bid to provide a boost to the economy. This has been created by the Circular Economy Wales, whose aim is to form a mutual credit system in Wales. They have worked previously with Sardex in Sardinia, which was created in the aftermath of the 2008 financial crisis, and is estimated to have saved thousands of small and medium businesses from crashing into bankruptcy. Celyn is backed by the Welsh government’s Foundational Economy scheme, which will give users access to an instant zero-interest credit facility to then spend at other businesses which are part of this network. Thus, this will be a huge boost at a time when businesses are facing falling demand and cash crunches, and will hopefully be able to stave off economic collapse for a number of them.
This is just one example of various economies and sectors moving away from traditional currencies. Digital currencies and cryptocurrencies have also been on the rise over the last couple of years, with more and more people becoming interested in this space. Cryptocurrencies are already being used extensively in quite a few sectors, of which the gambling space, especially online, is at the forefront. There are already quite a few online casino sites where users can make payments in the form of cryptocurrencies, allowing them to place bets using those tokens, and then withdraw their winnings as well in the same manner. This has proved to be quite popular among both crypto users as well as online gambling fans, and is just one way in which digital currencies can help shape the way transactions take place in the near future. You can find some useful information about the best cryptocurrency wallets from this article published on the Winz.io casino blog.
With regard to this Welsh alternative currency, the way it will work is by providing a credit line to users. They will be allowed to use mutual credit for small but essential transactions, and will have the benefit of zero interest being charged on this credit line. Members will have 12 months to settle this debt, through payment in kind, by offering goods of the same value to the other members. Thus, it takes the Welsh economy back to the days of barter systems, but this is an effective way to deal with the cash shortages that are undoubtedly being seen across the country, and globally as well, on account of the pandemic. It is only operational in Wales, while if it follows the same trajectory as that of Sardex, Wales’ SMEs will be strengthened by more than £250 million, and they will save nearly £200 million due to the cashless transaction system that Celyn will bring to Welsh businesses. Members will only need to pay a small fee to enroll in the system, which will help cover the costs of creating and running the Celyn system.
This is an extremely ambitious attempt to solve an economic crisis, but credit has to be given to those who came up with this idea.