How would “Circles” be different from our current money system?

You should read the about Circles article first.

1. The debt doesn’t need to be payed back
In our current monetary system new money is created when countries, cooperations, or individuals take a loan. One way to see Circles is that as soon as you spend some of your coins with someone else you have debt to this person but you are not forced to pay it back. This seems completely different from our current system and on an individual level it certainly is. However, a quick glance at the level of US national debt shows that this debt will also never be paid back. As long as the monetary supply doesn’t lose the connection to the GDP growth the money value can be relatively stable nevertheless.

2. Credit is not approved based on rating of banks but fixed per person
Currently, private banks, rating agencies and central banks can decide (based on some rules) whom to credit money to. Their decisions ought to guarantee the value of money. In principal they should also be liable for the debt but the term “too big to fail” shows that this is questionable at least. Furthermore this system favors those with the ability to access cheap money hugely. With Circles, no credit score is needed. Every human is granted the same basic credit to spend. This becomes realized as soon as other people connect to the human and accept their debt.

3. No (forced) debt union – more resilience
With our current fiat money (€, $, ..) we basically have a forced debt union. Everyone who holds € is to some degree liable if too many € are created through the process of new debt. Having the same currency in a  bigger territory has obviously a lot of advantages, but there are no firewalls implemented in case the system breaks down. With Circles, contingency measures are possible. People, cooperations and event countries could join into huge groups. However, the underlying smaller groups all the way down to personal level would continue to exist. If a big group were to fail, the system would only fall back to the underlying groups.

4. A steady growth rate of money – more stable economy
Keynesian economics suggest to influence the economy through the monetary supply. Mostly this means a state should increase debt (-> increase monetary supply) during a depression. This “control mechanism” gets lost with a monetary system like Circles. However – the theory of business cycles can be questioned in general with a basic income. As long as people constantly receive a basic income and thus have money to spend, the downward spiral of (people spend less -> companies shut down -> jobs are lost -> people spend less) can never happen.