Banking and integrity – the good side of money

For the third time in my life, I have become co-owner of a bank. This seems like a contradiction for a person who embraces voluntary poverty, strives for a simple life, aspires to the ideal of non-possession. Well, I call it a necessity on the way.

The meaning this step has for me is the reason why I feel led to share this unspectacular event in a person’s life with you. I am very critical of the consumerist-capitalist paradigm and dominant economic system. I am deeply suspicious about the integrity of the banking system. These banking institutions embody much of what I see is missing the mark in the global discourse of affluence.

Intriguing pattern of light - Art installation by Niki Saint Phalle in the historic grotto at the Royal Herrenhäuser Gardens in Hannover, Germany
Intriguing pattern of light – Art installation by Niki Saint Phalle in the historic grotto at the Royal Herrenhäuser Gardens in Hannover, Germany

It took me several years to find a bank that I am reasonably comfortable with.  When I started to consciously simplify things in my life, I reduced the number of bank accounts and the number of bank connections. I was actively pursuing the switch from the big commercial banks to a credit union. This is not easy when living in a territory that does not have any credit unions. And I deposited the retirement savings with the federal government instead of a for-profit bank.

But for me, credit unions are one step closer to what I am looking for. They have a limited mandate of accepting deposits and issuing credit, are governed by provincial legislation, and are generally owned by its members in a cooperative set-up. However, I have also noticed how little their appearance in the market place differs from a commercial bank, particularly for credit unions that have grown to become a sizeable institution. But behind the façade, there are still differences that are significant for me.

Back in Switzerland, I was the general manager of a credit union. Its members were the villagers of a mountain village with a population of 80. Its managed assets were the savings of the same villagers, a total of about CHF 3,000,000. Its business was to make available mortgages and credits for the needs within the community. Its operating cost was covered by the difference in interest paid and interest charged. It was all about serving the local needs. No expectation to make any profit, no speculation, and a limited commoditization of money. This is an example of open and transparent business and governance for the sole purpose of meeting local financial needs.

In the years of searching, I have not located a similar initiative in Canada that would be remotely accessible to me. I have no choice but to maintain a basic account with one of the commercial banks that operates locally (a necessity which has not been chosen for its particular integrity or any other remarkable attribute – it is the bank friends opened the first account with for us upon arriving in this country, but towards which I sense no loyalty). Otherwise it would be increasingly difficult to meaningfully participate in society or the economy: Many employers require direct deposit for wages. It appears like a person can no longer exist without having a bank account.

In this past year, I was unexpectedly faced with a new dilemma. Subsequent to my father’s death, some of the accumulated wealth needed to be distributed. I was not prepared to be a steward for those liquid assets.

In order to buy myself some time to reflect on how to respond to this gift and how to redistribute it in a meaningful way, I needed a place to park the money without compromising my values. That is the reason I became co-owner of a bank in Switzerland. The Freie Geminschaftsbank is a small banking coop with managed assets of around CHF 200 Mio. This institution was founded in 1984 after years of preparatory work. Part of that work was to discern systematically what an ethical and socially responsible way of handling money means and how this meaning can be translated into action within the regulatory framework of the Swiss and international banking systems. It is not a greenwash operation such as we can witness frequently in the industry and that occurs in waves of reaction to short-term cultural and social trends.

The guiding principles of Freie Gemeinschaftsbank are:

Money is neither a good nor an object for speculation:

The central task of Freie Gemeinschaftsbank is to mediate between people who have money available, and people who need money to achieve their goals. Freie Gemeinschaftsbank promotes responsible and forward-looking non-profit initiatives. Money needs to serve the development of the people.

Money allows socially, environmentally and ethically responsible economic activity:

Freie Gemeinschaftsbank promotes human beings, animals, and the environment. It sees itself as a charitable, non-profit bank that is not interested in profit-maximizing companies.

Money does not work; there are always people who generate the interest:

Depositors with Freie Gemeinschaftsbank can determine the interest rate on their savings funds, up to a maximum rate set by the institution. Each year, many bank customers waive any interest payment, which allows favorable credit terms. The credit terms depend – as far as possible – on the economic situation of the borrower.

Money will be used wherever possible according to the wishes of the investors:

People investing with Freie Gemeinschaftsbank have the opportunity to choose in which area they want their deposits to be used. Depositors know how their money is being used.

Money is not incompatible with transparency:

Freie Gemeinschaftsbank ascribes great importance to the transparent and supportive relationship with all its stakeholders. For example, it publishes in its annual report all of the borrowers.

Money has a variety of qualities:

Freie Gemeinschaftsbank promotes awareness of the different qualities of money such “buying” “lending” and “giving”.

(Translated from: Geist und Geld: Grundsätze der Freien Gemeinschaftsbank.)

Here is another description of the same guiding principles:

The founders of GLS Bank in Germany, constituted in 1974, were the first to concentrate on the qualities of loan money (to potentially stimulate human interest) and gift money (the most productive seed capital). They also focused on the capacity building force of bringing savers and borrowers, consumers and entrepreneurs together for investment, for example in organic agriculture, school education and care for handicapped people. GLS sees banking as a continuous and conscious process of directing the money flow to where it is needed in societal and human development perspective. Individual responsibility and care for the other human beings are seen as core drivers of these processes. Community building through participation in these processes is stimulated through the creation of borrowing and guarantor communities, dedicated savings instruments, and a choice for clients of the bank to determine for themselves the height of interest rates on their deposits. (from: deClerck, F. (2009) Ethical banking, p.8. Institute for Social Banking

I wish there would be a similar initiative to support on this side of the Atlantic. In the meantime, I continue to seek my own strategies to follow the above guiding principles in handling money affairs as much as possible, in order to direct the flow of money to where it is needed from a societal and human development perspective. Voluntary poverty is one powerful way of reducing the superfluous flow of money. It will lead to considerations of degrowth and stable state economies.  And it will invariably lead to an increased focus on relational versus transactional practice in handling financial and economic affairs. In the end, it will support the shift of consciousness from an attachment to security to a sense of confidence.

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