Wales plans to launch its own digital currency which will help businesses exchange services or products without the need for traditional payments.

The Celyn mutual credit system is based on a Sardinian model called the Sardex.

It is hoped that the Celyn could boost the country’s economy by £250 million over the next decade.

The Welsh Government awarded Circular Economy Wales £100,000 from its £4m Foundational Economy Challenge Fund to create the system.

“The Sardex benefited the Sardinian SME economy to the tune of 50m euros last year alone,” said Eifion Williams, CEO of Circular Economy Wales.

"Wales is similar to Sardinia in that SMEs make up 99 per cent of our businesses, so this has the potential to significantly boost our economy.

“If Wales had initiated a copy of the Sardex in 2008, and it had followed the same growth trajectory, Welsh SMEs would now be strengthened to the tune of £256m in additional turnover.”                                                           

The funding will cover a consultation and pilot in North Wales.

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Deputy Minister for Economy and Transport Lee Waters said: “Our Economic Action Plan sets out the direction for a broader and more balanced approach to economic development focused on making communities stronger and more resilient.

"The Foundational Economy Challenge Fund is fundamental to this and I’m intrigued to see the results of this mutual credit system pilot by Circular Economy Wales.”

Dr Paolo Dini, research fellow at the London School of Economics, was a founder of the Sardex and will support the Celyn.

“The Sardex has been replicated successfully in many parts of Italy, so it’s very exciting to be able to pilot this in Wales. This will be the first replication outside of Italy,” he said.

“I think the similar economic factors bode well, our challenge will be ensuring that businesses understand the benefits, and will begin consultation shortly.”