What is an ITEX Dollar?

What is an ITEX Dollar?

Posted: 07-May-2018

So, I'll bet you thought these trade dollars were just made up. Not at ITEX! 

When a trade exchange starts there is no currency in the system. Transactions begin when a credit line (a trade dollar loan) is extended to a member to purchase something from another member, creating the first transaction, or the exchange loans trade dollars to itself in order to purchase inventory as collateral for the currency or for its own operating expenses. Either way this is how the first trade dollars are created and enter circulation. As a member base grows, the trade currency expands as more members accept and spend it.

The exchange itself earns trade dollars typically through monthly fees and interest charged on negative balances. These trade dollar earnings can be used for purchases within the exchange to increase the trade currency in the system.  The key is to manage the currency responsibly. Exchanges can mismanage their monetary system in four ways:

 

1) The exchange spends more trade dollars than it earns

2) The inventory it purchases devalues

3) Credit lines to members are not re-paid

4) The exchange management sells trade dollars for a discounted cash payment (the worst case of mismanagement) - none good for the long term health of the exchange or its members.


The best-managed account will have the trade credit revolving; you earn and spend. A credit line can be used to take advantage of buys that are beneficial to the member. A positive balance should be maintained to take advantage of trade opportunities as they arise. A significant balance should only be maintained in an exchange that is well managed and proactively provides spending options for the member.

The ITEX Marketplace currency, ITEX dollars, has not run a negative trade credit balance for more than 10 years, i.e. the company spends less ITEX dollars every year than it earns. ITEX also offsets bad debts in the system by allocating 100% of interest on negative accounts directly to its bad debt fund, further securing your trading community. ITEX takes extensive measures to maintain the integrity of its role in the Marketplace economy and to protect against the misuse of ITEX dollars.  For example:

  • ITEX does not sell or purchase ITEX dollars for cash and prohibits members from doing so.
  • When considering an ITEX dollar credit line, ITEX assesses the financial stability of the member, the demand by others for the member's product or service and runs a credit report.
  • ITEX employees and senior management are prohibited from having ITEX accounts, removing conflicts of interest to best manage goods and services available for members to purchase.

Sound ITEX dollar management and policies create stability and is key to the solidity of the Marketplace and the security of the ITEX dollars in each member's account. 

The ITEX dollar is the most stable and secure currency in the exchange industry. 

Sincerely,

ITEX Barter Canada Team