The JAK Bank Sweden and CC
Presented at the conference Complementary Currencies in Europe, 2004 in Bad Honnef by Oscar Kjellberg, development manager, JAK Sweden. [email protected], www.jak.se
JAK today
Activities:
• Promotion of interest free economics
• Support to the JAK Community Dialogue
• Bank services based on an interest free savings and loan system.
Our activities are based on the knowledge of the negative effects of the use of interest. The ultimate goal of JAK is an interest free economy. Promotion of interest free economics is our aim.
Knowledge of our interest free idea and our actions is best spread by the word of mouth among people who know each other. Hence our marketing is based on the dialogue that members have with other people about economy and interest. We are organised to support all members in this community dialogue.
JAK is operating an interest free savings and loan system since 1970. A bank licence was obtained in 1997. Formally JAK is a co-operative bank. We have two products. Both are interest free.
1. The Balanced Savings Loan (for all but best suited for individuals). You save in order to get a loan for your self, a relative or a friend.
2. The Community Supported Loan Fund (for small companies and associations). You save together with others to create a fund for a loan to an association or a small company that is important to the community.
The member’s deposits finance all loans. Yearly member fees and loan fees (approximately 2,5
% effective rate of interest) covers the administration and development costs.
The number of members is steadily increasing. We were 19 000 year 1991 and we are now (year 2004) 26 000 members. The increase during the last 12 months is 7 percent. The members are saving a total sum of 75 million and borrowing 67 million.
We expect a continued structural change but with a new direction (the Big Roll-over) because of changed relative prices between energy and labour after peak oil. In that perspective not only the household economy of the members but also their social and local economy is of major concern for JAK.
We are developing
1. A wholesale bank system will be in place in 2006.
2. We are also developing a (balanced and interest free) cheque account (without cheques) for small companies.
The next thing to develop may be a house and pension savings system. The funds would be invested in real assets in the local economy rather than in financial assets on the global capital markets.
Complementary currencies
JAK is not considering complementary currencies at the moment although there are some members who are interested. It would however, when we have our wholesale bank system operative, be only a minor step for us to develop a simple complementary currency within the JAK community.
If we give our members the right to make temporary over draughts on their current accounts and combine that with a system for cell phone payments we actually have a system that can be used in places where there are many JAK members but insufficient access to national currency.
An example. Two members meet to make a transaction. – I have no cash, says the buyer. He takes his cell phone and logs on to his JAK account where he can transfer the sum to the sellers account. The seller immediately gets an SMS from JAK that informs him what sum of money he just received from the other member. Then he can safely hand over the item to the buyer.
Why are complementary currencies not an issue in Sweden? It may be that we have not yet fully understood the scope of the structural change that has taken place during only the last twenty years. We have had a very fine network of savings banks and agricultural co-operative banks and a very good postal service that included payment services. Most people and small companies had good access to financial services. Today most of the savings banks and all agricultural banks have been sucked up in the Föreningssparbanken (a private limited shares company), which is one of the four oligopoly banks in Sweden. The Postal Service does not include payments
anymore. It has been transferred to a separate company but it is now suggested that they will drop payments completely. Access to currency for daily payments is becoming a problem that, to an increasing extent, is handled by local retailers.
It looks like complementary currencies would be a natural remedy so why is it not an issue on the agenda? So far the focus has been on the problems with reduced access to credit. JAK is working together with other organisations in projects concerning the problems of the local economy that follows from the globalization process. The Community Supported Loan Fund and cheques account for small companies is what we have developed to meet the new demands of the local economy. A complementary currency would be in line with early JAK ideas. Neutral money – money that was not used a good that could be an investment like other goods – was one of the Danish JAK’s basic ideas in the 1930-ies. It should be produced by the community and backed by productive assets like farmland and forests. Looking ahead we can see complementary currencies as an option when we have developed a house and pension savings system that invest in real assets in the local economy.
JAK Members Bankis an important part of the movement for change of the conditions in economy both locally and globally
Our Values and ideas.
• Human beings should be able to interact as free and equal beings. We belive in diversity and cooperation.
• Ethical considerations are more important than demand for profit.
• Ecological sustainability take priority over economic activity.
• We stand against the demand for perpetual economic growth.
• Money should funktion as an interest free means of exchange - not a commodity for speculation.
• Interest free credits support longterm investments and is a prerequisit for sustainable development.
• A fair economy requires democracy and transparency.
• Healthy local communities are the base for a healthy globalisation.
Money should be used locally where people live, and be used to meet real human needs.
Banking activity
Members join a savings and loan programme, where they earn Saving Points instead of interest on their deposits. The Saving Points create the basis for borrowing – determine how big the
‘Basic loan’ can be.
If they need a bigger loan, the Basic loan can be multiplied. How many times bigger the ‘Add-On Loan’ can be, is decided each month by the Board of Directors, depending on the liquidity of money in the Bank at that time. At present you can borrow 15 times as much as your basic loan.
Most loans (70%) is house – loans to private families.
Some loans are business loans to co-operatives, farms and small firms.
And there is Community loans to windmills and schools, where the necessary Points are given as gifts.
Total amount of outstanding loans in June 2003 is 500 million Skr = 55,5 million Euro Total amount of bank deposits is 600 million = 66,6 million Euro
Reserves are kept in Swedish state bonds Equity is 65 million
No money on the capital market.
Collateral is mortgage on houses or guarantee signatures in most cases Loans smaller than 100 000 SKR ( 10 000 Euro) do not need a collateral
Instead of interest JAK has a fee to cover the costs of administering the loan
Loan fee : (3,5+number of years) % once Example: Borrow 100 000 SKR for 10 years
For a 10 year loan it will be (3,5+10)% =13,5%
13,5% * 100 000=13 500 SKR in total
13 500 SKR/ 120 months = 112,5 SKR/ month (ca 12 Euro)
Transparency policy; ethical policy
All members get a JAK Magazine four times a year, with information on everything going on, and those ca 350 active members get an internal Newsletter at least once a month. JAK homepage invites to meetings and discussions.
JAK Members’ Bank is owned by its members and is a democratic organisation; everyone has one vote at the Annual Meeting where the Board of Directors is elected and decision about the budget and policy is taken. We also elect member auditors and an ethical council handling complaints or conflicts.
Every member, who wants to know what is going on, is invited to seminars (4 a Year) where we discuss our policy and evaluate the banking activity. Basic Information Courses are held
regularly, and if you chose to be a Local Representative you get training and a three days visit to The Head Office.
All members are treated equally. Their ‘accumulated savings points’ determine how much they can borrow without interest. Everyone contributes as much as he/she benefits. Of course there can be gifts of saving points too.
Social impact of the projects
• People can take a better control over their own lives, when they can have a credit and repay their debts without the burden of interest.
• Production can be cheaper, and more jobs created, when capital cost is lower.
• Co-operation is encouraged; Savings or Saving Points can be gathered for support of a project or a local business that people want.
• The money in a region does not have to flow to the big cities when JAK can act as a Community Bank. Savings of the inhabitants stay in the region.
Saving products offered
You may put your money in a Current Account or a Savings Account. In the first case you make deposits and withdrawals at any time, but you gain more Savings Points on a Savings Account.
Many members have the same sum automatically transferred to their Savings Account each month.
‘Aftersavings’ is special JAK invention.
In order to get a bigger loan sooner than you should according to your Points, you can ask for an
‘Add-On Loan’ and make the savings at the same time as your repayments. When your loan is repayed you have a nice sum of money of your own as well.
The Community Bank is a new concept with three parties.
1. A Regional Association or a Non- Governmental Organisation is interested in helping a special project or enterprise. The supporters of the project does not have to be members of JAK but they can deposit their savings in JAK.
2. JAK Members’ Bank open a special support account for the project.
3. The project can apply for an interest free JAK loan immediately, without any Points.( they accumulate later)
Before financing a project or business JAK Members’ Bank checks that the project is ecologically sound, and that there is some collateral.
No interest is given on any Account. The benefit is the cheap loan to yourself or someone else you choose to support.
Access to/from clients
JAK Members’ Bank is functioning as a Telephone Bank.
Members and clients transfer their deposits and withdrawals through the Postal Giro system or ordinary Banking Giro. Within two years we will be able to use internet services.
Information about the savings and loan system, and practical help with loan calculations, is given by the local sections and local representatives, in different parts of Sweden.
Main obstacles faced
We would like to have access to the payment and data clearing system of the banks in Sweden, but up till now it has been to expensive to join. Now we have decided a cooperation with svensk Kassa service, and there will be better payment services for members next year.
A final word
If the goal is a vibrant and fair local economy, what is the best strategy? Is it to begin with interest free complementary currencies or with interest free credits? The two interest free credit systems of the Danish (15 banks) and Swedish JAK (one bank) is unique but are many
complementary currency initiatives of different types. The question is hard to answer but very interesting in it self. Lets see our selves as members of the monetary reform community and co- operate in the evolution of a new economics and a new infrastructure.
