Regional Economic Communities

A business and community paradigm which is viable in the long-term – a concept worth living

Can larger firms use the Grok for commercial-scale credit clearing?

Yes – provided that adequate procedures and precautions are implemented, such that a robust basis for well founded trust is maintained. The Grok is technically a multi-party trade exchange credit clearing system, and inasmuch inherently also exactly what firms need to facilitate business between themselves, albeit on a much larger scale than we have been talking about previously. For effective commercial credit clearing the creation facilities provided need to be on the scale of turnover credit required between the participating firms – which will typically dwarf the sums which can be secured by the mechanisms otherwise proposed.

Note that we are using the conventional term "credit clearing" in this context simply to be understood. The creation of Groks by the participants themselves on the basis of securities still applies!

Trade exchange credit clearing systems only work when each participant can adequately both supply and consume within the system, i.e. credit and debit can balance out in the medium to long term. We can certainly find 'closed loop' examples where the private consumer is not required, e.g. a producer of livestock fodder selling to a livestock farmer and purchasing manure from him; or a foundry sells sheet metal to a parts manufacturer, who sells to a machine manufacturer, who in turn sells some machines to the foundry. While we can and indeed should look for such supply chains and support them to become as local as possible, in general the loops can only be closed by including the final consumers, i.e. private citizens.

So we suggest to start a Grok system with private and small business participants until it is established in both organisation and reputation. So it will then already have the consumer base which will make it attractive to retailers of all sorts. Then add the larger firms, ensuring that:

  • Creation facilities are not more than a firm requires to pay its suppliers which accept Groks
  • They are also not higher than its realistic prospects to supply goods or services in Groks
  • Creation facilities are linked to a firms actual volume of sales within the system
  • You start with well established and financially sound firms which sell things that everyone needs or wants to buy, e.g. food, clothing, electricity, water, etc.

The first stipulation puts the onus on the firms themselves to talk with their local suppliers, and they in turn with theirs – which they'll probably want to do, since an attractive local customer base is on offer. So the firms themselves will help to find and create the closed loops without which reciprocity is not possible.

Finally, note that we are talking about turnover credit here, not investment credit. If investment is needed, then the ReeComm itself can invest in a company – provided that the company meets the stipulations regarding striving for sustainability. Also, a company can solicit Grok loans on the Grok marketplace – which some people may be glad to grant as a way of preserving value (avoiding demurrage) and furthering local resilience.

< Back | Next >