A Commercial Credit Circuit, or a C3, is a mutual credit system (credit from all to all) through which associated companies can make transactions using an internal exchange unit. This exchange unit is backed up by money and/or financial guarantees. C3 can channel any public or institutional expense. The advantage of this process is that this resource has a greater stimulus to circulate locally, and consequently, generates a greater impact in the local economy and in tax collection.

A Central Administrative Unit registers transactions and lines of credit. Companies can have a negative or positive balance in the system depending on whether they have bought/sold more in relationship to what they have sold/bought. STRO developed a specialized software called Cyclos to facilitate this administration. Generally speaking, an active mediation between supply and demand is required during the first few years for the system to reach its critical mass.

In the more advanced systems there can be contracts with credit insurance companies and with banks, guaranteeing the conversion of the internal exchange unit to national money at any time (normally charging a commission). In this way, financial guarantees (including Credit Insurance) become a form of commercial liquidity, increasing the possibility of the C3 penetrating the market of financial institutions.

The 100% guaranteed backup of the internal exchange unit means that within the deadlines of the guarantees, the unit is convertible to money. This means that companies that use the internal exchange unit can spend money outside the C3 system, overcoming one of the weaknesses of the Barter systems. It can sometimes occur that when associates want to convert their internal exchange unit into money they are unable to do so because of the “cash flow”. That is, guarantee money can be available either in the short term or in the long term. The C3 system has a fund called the Time Gap Fund that can provide this value “in advance”, knowing that its return is 100% guaranteed.

Some of the activities of the C3 system are:

• Identify companies interested in joining and participating in the C3 system so as to broaden internal transaction options.
• Administer the backups of the internal exchange unit, such as money, financial guarantees and credit insurance. This administration must be safe, monitored and transparent.
• Issue the internal exchange unit through the Cyclos Software.
• General activities such as marketing, management, etc.

The C3 works as a non-profit association in which associates get together to make this method of generating liquidity viable. For the same reason, the C3 has become a new form of participatory economics.