Thinking money - From Sardex to the Bancor and beyond

In recent years, there has been a growing interest in alternative monetary frameworks, whether driven by dissatisfaction with existing financial structures or in pursuit of more resilient, cooperative models. As mentioned in an earlier post, while I do not subscribe to many of the views expressed by former Greek Finance Minister Yanis Varoufakis, I find his proposal for a “monetary common” thought-provoking. It connects with broader discussions about post-sovereign financial systems, mutual credit, and supranational liquidity. In this article, I explore how Varoufakis’ ideas compare to earlier frameworks such as Keynes’ Bancor and contemporary implementations like Sardex and IMF Special Drawing Rights (SDRs).

Mutual credit for local economies

Founded in 2010 on the Italian island of Sardinia, Sardex is a regional mutual credit system designed to support local small and medium-sized enterprises (SMEs) during the Eurozone debt crisis. Participants in the Sardex network trade goods and services using credits pegged to the euro. However, these credits are non-convertible and circulate only within the Sardex ecosystem. Sardex is not traditional money, it is a form of reciprocal trust formalized as digital credit. No interest is charged, and no euros change hands in the internal system. Transactions are cleared multilaterally among participants, allowing the local economy to function even in the absence of external liquidity. This model creates a resilient internal market that complements, rather than replaces, the national currency. Sardex focuses on local economic resilience, operates without traditional banking, and emphasizes values such as transparency, solidarity, and reciprocal exchange.

The “Monetary Common” and  Varoufakis’ transnational ledger

Yanis Varoufakis’ concept of a monetary common takes the idea of mutual credit to the transnational level. It draws inspiration from Keynes and from digital ledger technologies, proposing a system where countries retain monetary sovereignty while using a shared unit of account for international transactions. This proposal imagines a future in which international trade is settled not in dollars or euros, but in a digitally mediated common ledger accessible to all member nations. It does not require a central bank or fiscal union, and national currencies would remain intact. What changes is the clearing mechanism, which becomes more neutral, cooperative, and inclusive. Varoufakis' design is a reaction to the failures of the eurozone, a system that forces internal devaluations and imposes adjustment burdens almost exclusively on deficit countries. The monetary common seeks to reverse this asymmetry by providing an international settlement structure that respects national autonomy while fostering cross-border coordination.

Keynes’ Bancor. A missed opportunity?

The roots of the monetary common go back to John Maynard Keynes’ proposal of the Bancor at the 1944 Bretton Woods conference. Bancor was conceived as a global clearing currency to be used by states rather than individuals. Under Keynes' design, countries would hold accounts at an International Clearing Union (ICU), and trade imbalances would be settled in bancors rather than in gold or national currencies. What made Bancor revolutionary was its built-in incentives for balance: not only deficit countries, but also surplus nations would face penalties for hoarding bancors. Keynes believed that global economic stability required symmetrical responsibility, and his design aimed to ensure that no country could indefinitely sustain surpluses at the expense of others. Ultimately, the United States rejected the Bancor in favor of a dollar-centered system, setting the stage for the postwar monetary order we live in today. In hindsight, this decision entrenched a structural imbalance into the global financial system, one in which the issuer of the dominant reserve currency accumulates persistent deficits, while surplus countries escape structural adjustment altogether.

The IMF’s quiet supranational asset

The closest approximation to a supranational currency today is the IMF’s Special Drawing Rights (SDRs). Created in 1969, SDRs are not a currency in the traditional sense, but a reserve asset allocated to IMF member countries. Their value is based on a basket of major currencies (currently the U.S. dollar, euro, Chinese renminbi, Japanese yen, and British pound), and they can be exchanged for usable currencies through voluntary transactions arranged by the IMF. SDRs are issued during times of global liquidity stress. The most recent allocation of $650 billion in 2021, was designed to support pandemic recovery. While SDRs are created ex nihilo, much like central bank reserves, they are used only by states and central banks and do not enter circulation in the broader economy. SDRs function as a top-layer reserve mechanism. They are allocated according to a country’s IMF quota, which reflects its economic size and voting power. Larger economies receive a greater share, while low-income nations receive relatively little. Countries may exchange their SDRs for hard currencies through IMF-brokered arrangements, and they incur interest charges if they spend more SDRs than they hold.

Three systems, three visions

Sardex, Bancor, and SDRs each represent distinct visions for how money can be reimagined. Sardex is a locally managed mutual credit system designed to strengthen small-scale, community-based exchange. It creates liquidity without traditional banking or interest and fosters economic resilience through a non-convertible credit mechanism rooted in trust. Bancor, by contrast, was an ambitious proposal for a post-war international order. It was designed to replace gold and national currencies in the settlement of international trade, using a neutral global clearing unit. Its most radical feature was its commitment to balancing global trade by penalizing not just debtors but also persistent creditors, a feature absent from today’s monetary system. SDRs, while far less radical, are the only operational supranational asset in use today. They supplement official reserves and provide liquidity, but without challenging the dominance of the U.S. dollar or addressing structural trade imbalances. Their design is modest, pragmatic, and politically acceptable, but limited in scope.

Creation "out of thin air"? Yes, but with limits

When the IMF allocates SDRs, it does indeed create them “out of thin air”, by simply crediting countries’ accounts. This process resembles central bank money creation, in that no taxes or borrowing are required. However, unlike money created by national central banks, SDRs do not circulate within domestic economies. They are used only between governments and are subject to IMF governance. The allocation of SDRs increases global liquidity, but the mechanism remains conservative: allocations are infrequent, tied to quota share, and carry interest obligations. As such, SDRs are not designed to equalize global financial power or promote structural reform. They operate within the framework of the existing system, smoothing shocks rather than reimagining the architecture.

Layers of monetary imagination

Each of these systems operates at a different level. Sardex imagines community trust as the foundation for economic exchange. Bancor envisioned a fairer global economy where power is balanced between surplus and deficit countries. SDRs provide a technocratic tool for global liquidity, without altering the structural asymmetries of the international financial system. Varoufakis’ monetary common draws from all three: it seeks to preserve national sovereignty like Sardex, to rebalance global trade like Bancor, and to harness digital infrastructure in a way that SDRs, so far, have not. Rather than seeking a single solution, the future may lie in building layered systems, local, national, and global, that are more transparent, equitable, and adaptable to human needs. In an era marked by financial instability, geopolitical fragmentation, and technological acceleration, these experiments offer not just monetary alternatives, but a redefinition of value itself.