The case of JAK - Meetup

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					Interest-free banking:
The case of JAK Bank

      A Few Starting Considerations
   The money system has a great, but largely unknown, effect on
   Our thoughts/actions are the result of ongoing conditioning
   Economic thinking dominates our culture and particularly our
    working lives (Does it make business sense? Is it profitable?)‫‏‬
   Difficult to link our daily actions with the big picture (hard to
    perceive their impact on a large scale)‫‏‬
   Resistance to the change of established worldviews/habits
   Holistic approach: all forms of life on earth are interconnected.
    The well-being of our own self is dependent on the well-
    being of everything we are connected to

      A Few Starting Considerations
   From custodians of our money, banks have become growing
    multinationals. They have lost touch with human society
   Speculation has become more powerful than trade. People
    running the system have more to gain from instability than
   The primary measure of how well society is doing has become
    that of economic growth rate. It has become the most
    important objective of the government
   We are implicitly given the message that growth is the most
    important aim for the welfare of our society
   One hidden problem: compound interest generates a need for
    perpetual, exponential growth
                                     Example of a Loan

               $1,600,000                                       How does the interest grow for a
                                                                £100,000 loan at 12% for 25 years at
                                                                simple vs compound interest?
Future Value




                                                                Simple Interest: £300,000

                            0   5   10           15   20   25   Compound Interest: £1,600,000

    Misconceptions about money
Transparency: “Interest
is paid only when we
borrow money”

Fairness: “Everybody is
treated equally in the
               Effects of interest
   Causes inflation, environmental destruction and
   Destabilises economy and society
   Transfers money from the poor to the rich
   Favours only projects that lead to profitability in
    the short term

               JAK Members Bank
   Operating an interest-free savings and loan system in
    Sweden since 1970
   No-profit cooperative bank owned and managed by 36,000
    members, each with one share
   Loan fees and equity deposit cover the operating costs and
    ensure a degree of liquidity
   Members’ deposits finance all loans
   Operates as close to break-even as possible, charging just
    enough in loan fees and membership fees to cover its
    operating costs
   Annual membership fee: €20
   Growth is 12% per year, 1% credit write-offs
               JAK Members Bank
   Average length of a loan is 10 years
   Unique cooperative/solidarity aspect, educational role is
    key. A bank of reciprocity, everyone is treated the same
   Instead of competing with one another for money, they are
    better off sharing their savings to help members most in
   Safer, relying on one another as opposed to relying on the
    volatile mainstream financial markets
   Blog/forum for open discussion among members
   Quarterly newsletter and workshops about personal
    finance and community well-being

Differences with conventional banks
     Traditional Bank               JAK Members Bank

   Pays interest on deposits      Gives savings points on
   Charges interest on
    loans                          Administrative loan fee
   Shareholder ownership          Members ownership
   Global for-profit              No-profit local
    enterprise                      cooperative
   Fractionary system             100% reserve system
           Savings and Loan System
   Savings-orientated system: “Members borrow
    from their future savings”
   Three type of loans
   Savings Points, Savings Factor
   Supplementary Savings
   Income streams:
          Membership fee
          Loan fees
          Treasury bonds
                   Loan Comparison
The JAK model does not automatically provide a financial benefit over what
  could be achieved with conventional financial products.
Let's make a comparison between JAK and conventional loans, including
  £10,000 savings. Let's assume a £10,000 loan over 10 years:

     Support Saving Loan: Example
A group of people share their savings to provide capital
  (interest-free loan) to a local company that manufactures /
  installs photovoltaic cells, wind turbines, etc. increasing its
  competitiveness in the market

   Renewable energy will cost less
   This will spur innovation and healthy competition           18
   Support Saving Loan: Example
As a result, the community gets access to
 affordable, renewable energy

         Benefits for Members
   Members have access to a lump sum
    of money at the end of the loan
   Savings Points can be donated to
    other members or local funds
   Many members find this an
    empowering form of charity

         Criteria to Grant a Loan
   Available money
   Ability to repay (including
    supplementary savings)‫‏‬
   Collateral (security)‫‏‬
   6% Loan Equity deposit

                      Final Thoughts
   Creating money out of nothing and charging interest on it may be the
    most important factor in driving humans beyond the means that
    Nature provides
   Money should not be the only measurement for the success of an
    individual/enterprise. Growth of the community, human development,
    funding of sustainable/ethical projects should be more important than
    the accumulation of wealth.
   We need economic reforms which encourage and reward cooperative
    and altruistic behaviour, which spread through reciprocity to achieve
    well-being for all
   As an increasing number of small companies go bankrupt as a result
    of their inability to repay their debts, people begin to understand the
    value of an interest-free world. Members can join forces and create
    companies free from the burden of compound interest.
                      Final Thoughts
   There is a growing demand for a more human way of dealing with
   Individuals and society benefit from co-operative organisations
   Many people want their savings to be put to better use for society,
    without necessarily expecting a financial return
   Internet provides a great opportunity for bringing people together
   JAK UK should be run as a social business that operates as close to
    break-even as possible. At least initially, such initiative should be
    targeted at people already engaged in social, environmental and
    ethical causes
   Initial funding would help to achieve a critical mass where further
    growth can be self-sustained

                   Useful Resources
   Mark Anielski: An Assessment of Sweden’s No-Interest Bank
   Mark Burton: Unravelling Debt (2008)
   Ana Carrie: How Interest-free Banking Works: The Case of JAK
   Vladimir Z. Nuri: Fractional Reserve Banking as Economic
    Parasitism: A Scientific, Mathematical & Historical Expose,
    Critique, and Manifesto (2002)
   David Icke: I Want The Earth, Plus Five Percent
   Margrit Kennedy's website:
   Jak Members Bank website:
   Paul Grignon: Money as Debt (2006)‫‏‬
   The Money Masters (1994)‫‏‬
When do we start?


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