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A socially and environmentally beneficial bank “efficiently managing the resources of the local community”

August 21, 2017

PLANET LOCAL recently sent news of Ebanka

In 2008, Goran Jeras, was working in The Netherlands, helping big banks and financial institutions improve their risk-assessment methodologies in the midst of the financial crash. He realized how unsustainable the mainstream financial sector is today,  financially, socially and ecologically. Having seen the ethical problems inherent in a system driven entirely by profit — in which the needs of human beings and the planet count for nothing – he returned to his home country of Croatia and, together with friends in the Croatian banking world, founded Ebanka, an “ethical development bank” entirely owned and democratically governed by its own members.

“The purpose of the bank,” he said, “is to efficiently manage the resources of the local community”

He continued:

“Banks themselves, if you look at the value chain, do not add any value. The role of a bank is to be a catalyst, utilizing the resources and the funds of the community, towards those that are creating a new value for their community. To that end, Ebanka functions as a non-profit, for the reason that any money earned would be at the expense of the community — those who are actively creating new added value”.

“Ebanka’s loans to individuals are only given to satisfy basic human needs — like education, health and housing, or to resolve social problems caused by past loans– not to buy unnecessary material goods. So Ebanka functions as a normal bank and should be the only bank its members need to use (that is, as long as they don’t plan on taking out credit to buy lots of things they can’t afford and don’t need)”.

Zagreb, Croatia Jorge Franganillo

Ebanka also does strict due diligence before investing in projects and businesses: loans not only need to be financially viable, but beneficial to society and the environment. Jeras compares their system to crowdfunding, because the loans are given without interest, and investors (co-op members) even have some say about which projects their money goes to. The projects essentially become joint ventures between the borrower and Ebanka’s members, and no one profits except new environmentally and socially conscious businesses and ideas.

Every member of the cooperative has an equal voice when it comes to voting on big decisions, regardless of the value of their deposit. Ebanka also places great value on transparency: there are no hidden fees or expenses, and information about all important decisions is made publicly available. Because of this democratic structure in which personal relationships matter, Jeras believes membership will need to be capped between 60,000 and 100,000.

To learn more, visit Ebanka’s website and read a neat summary of the advantages offered.





Economic reform proposals; three from colleagues in America, Japan and Britain

July 18, 2017

Which approach would have been supported by Thomas Attwood, who advocated participatory democracy, strengthening of regional economies and economic and monetary reform? An amalgam of all three?

Ellen Brown reminds us, in her latest article, that ancient civilizations celebrated a changing of the guard with widespread debt cancellation:

“It is time for a twenty-first century jubilee from the crippling debts of governments, which could then work on generating some debt relief for their citizens”.

She advocates an alternative to sovereign debt (aka national debt, the amount of money that a country’s government has borrowed). Her model: the Bank of Japan’s quantitative easing programme which has enabled it to buy 40% of its government’s debt, an ongoing process, creating an interest-free debt ‘owed to oneself’ – the accounting equivalent of a debt cancellation. Gross interest payments on Britain’s central government debt are projected to be £48 billion for 2016/17, according to the Treasury. Ellen would approve the government’s repayment of almost a quarter of the debt owned by the Bank of England, which pays the profit back to the Treasury and call for more to be done.

A reader living in Tokyo responded to her article:

“I don’t really agree with her assessment. Basically she says “Look Japan is printing free money and has no inflation that everyone worries about so why shouldn’t everyone do it?” He points out that, as happens in Britain, all the money being printed is going into the hands of a relatively few extremely wealthy people; no inflation is created because these people don’t need to buy more household goods and the money goes into the stock market which has ballooned.

He adds sardonically that the attitude is, “So yes – feel free to print as much money as you like, but only as long as you don’t give it to people who need it”.

 Canadian/American Elon Musk advocates a universal basic income:

And British economists (Finance for the Future) advocate ‘repurchasing debt like Ellen Brown’ in their proposal for ‘green quantitative easing’ set out in this detailed report (right).

MP Caroline Lucas has also been proposing this route to rebuilding our economy, tackling climate change, and providing decent long terms jobs in every city, town and village across the UK. She writes about Green Infrastructure Quantitative Easing (GIQE), a concept first proposed by the Green New Deal Group. This would be an investment in a positive green and socially just future. It could:

  • train and employ a nation-wide ‘carbon army’ which army would make all of the UK’s 30 million buildings energy efficient, and, where feasible, fitted with solar panels, reducing energy bills and fuel poverty, cutting greenhouse gas emission and dependence on imported energy,
  • take steps to make the country more resilient to flooding,
  • finance the construction of affordable highly energy efficient housing, built predominantly on brownfield sites
  • and help to fund improved regional public transport networks to help revitalise local and regional economies.

After detailed costings, Ms Lucas continues: “The actual mechanism is relatively straightforward. The Bank of England would e-print tens of billions of pounds annually, as it did during the last round of QE, and a considerably enlarged publicly owned Green Investment Bank (GIB) would issue investment bonds to be bought by this QE programme. This would effectively leave the money required to fund green investment both debt and interest free, in the hands of the Green Investment Bank (GIB)[iii], to be invested over a realistic time scales and so be non-inflationary”.

Mark Carney, the Governor of the Bank of England, confirmed that the “Green New Deal” is technically possible. In a letter to Caroline Lucas he said that, if the government requested it, the next round of QE could be used to buy assets other than government debt – clearing the way for this sort of green infrastructure programme. And a cautious appraisal of the case for central banks prioritising green assets over regular ones in their purchasing policies was made in May’s Financial Times, by economist Alexander Barkawi, founder-director of the Council on Economic Policies.





Central banks should make Green Investment decisions, ‘for the sake of all our futures’

July 3, 2017

Josh Ryan-Collins, co-founder of the Brixton Pound, is senior economist at the New Economics Foundation, visiting research fellow at Southampton Business School’s Centre for Banking, Finance and Sustainable Development and at London’s City University Political Economy Research Centre. His research focuses on financial reform, including structural banking reform and monetary policy and he is co-founder of the ‘Brixton Pound’ local currency in South London.

Edited extracts from his recent article:

Josh sets the scene – pointing out that the European Central Bank is currently creating €60bn a month in new money under its ‘Quantitative Easing’ program, which is being used to purchase a range of public and commercial assets across Eurozone member states. They have so far bought £82 billion worth of corporate bonds. The Bank of England, meanwhile, completed its £10bn corporate bond programme in May.

The criteria central banks use to choose the types of corporate bonds to purchase are ‘market-neutral’; they base their decisions on much the same criteria as any other large commercial investor, purchasing high quality, ‘investment grade’ assets. New research by the London School of Economics’ Grantham Institute released last week suggests that when it comes to carbon-intensity, corporate QE purchases are favouring high carbon sectors.

A number of central banks clearly recognise the risks to financial stability posed by climate change, as Mark Carney’s “Tragedy of the Horizon” speech (on the horizon?) and three later addresses made clear, but as yet their focus has been confined to encouraging greater ‘disclosure’ by financial market participants.

Mark Carney, dubbed an unlikely champion

Ryan-Collins insists, “Central banks must go further. Institutional investors are already accounting for environmental and social governance criteria in making their investment decisions. With the world rocked by Trump’s decisions, it is more urgent than ever for us to call upon central banks to do the same and take a step towards mainstreaming ‘green’ finance – for the sake of all of our futures.




Hines: using quantitative easing and housing bonds constructively

June 14, 2017

Thomas Attwood would surely have agreed with the prescription offered by Colin Hines, a former co-ordinator of Greenpeace International’s Economics Unit, of providing hope, not just for the young, but for every community in the country.

His letter in the Guardian continues: ”To do this Jeremy Corbyn must revisit and vigorously shake his people’s QE “money tree”. This could pay for real economic activity on the ground via decentralised infrastructure projects to make the nation’s 30 million buildings energy efficient, ensure a shift to localised renewable energy and the building of local transport systems.

Secondly, the divide between young and old must be bridged by policies fostering intergenerational solidarity. Older people with significant savings should be offered “housing bonds”, paying, say, 3% interest to help fund a massive council and affordable homes programme.

Tuition fees would be scrapped, but so too must be the threat of having to lose a home to pay for care, or having to scrabble for means-tested benefits such as heating allowances.

Financed by progressive and fairer wealth and income taxes, and a clampdown on tax dodging, this should have an election-winning appeal to the majority of grandparents, parents and their young relatives.





If China can fund infrastructure with its own credit, so can others

May 22, 2017

Today we received an article from and by Ellen Brown published in TalkMarkets, described in Business Wire (January 2015) as a financial-information website. In six months it reached ‘critical mass’ – its one millionth pageview – in early December 2014.  Extracts from Ellen’s four page article:

While American politicians debate endlessly over how to finance the needed infrastructure fixes and which ones to implement, the Chinese have managed to fund massive infrastructure projects all across their country, including 12,000 miles of high-speed rail built just in the last decade.

How have they done it, and why can’t we?

The Chinese government owns the majority of its banks. About 40% of the funding for its giant railway project comes from bonds issued by the Ministry of Railway, 10-20% comes from provincial and local governments, and the remaining 40-50% is provided by loans from federally-owned banks and financial institutions. Like private banks, state-owned banks simply create money as credit on their books. The difference is that they return their profits to the government, making the loans interest-free; and the loans can be rolled over indefinitely. In effect, the Chinese government decides what work it wants done, draws on its own national credit card, pays Chinese workers to do it, and repays the loans with the proceeds.

The US government (and others) could do that too, without raising taxes, slashing services, cutting pensions, or privatizing industries.

Countering the dogma that “private companies can always do it better and cheaper,” studies have found that on average, private contractors charge more than twice as much as the government would have paid federal workers for the same job. A 2011 report by the Brookings Institution found that “in practice [PPPs] have been dogged by contract design problems, waste, and unrealistic expectations.” In their 2015 report “Why Public-Private Partnerships Don’t Work,” Public Services International stated that “[E]xperience over the last 15 years shows that PPPs are an expensive and inefficient way of financing infrastructure and divert government spending away from other public services. They conceal public borrowing, while providing long-term state guarantees for profits to private companies.” They also divert public money away from the neediest infrastructure projects, which may not deliver sizable returns, in favor of those big-ticket items that will deliver hefty profits to investors.

Today’s infrastructure banks are basically revolving funds. A dollar invested is a dollar lent, which must return to the bank (with interest) before it can be lent again. A chartered depository bank, on the other hand, can turn a one-dollar investment into ten dollars in loans. It can do this because depository banks actually create deposits when they make loans. This was acknowledged by economists both at the Bank of England (in a March 2014 paper entitled “Money Creation in the Modern Economy”) and at the Bundesbank (the German central bank) in an April 2017 report.

Contrary to conventional wisdom, money is not fixed and scarce. It is “elastic”: it is created when loans are made and extinguished when they are paid off. The Bank of England report said that private banks create nearly 97 percent of the money supply today. Borrowing from banks (rather than the bond market) expands the circulating money supply. This is something the Federal Reserve tried but failed to do with its quantitative easing (QE) policies: stimulate the economy by expanding the bank lending that expands the money supply.

The stellar (and only) model of a publicly-owned depository bank in the United States is the Bank of North Dakota (BND).

It holds all of its home state’s revenues as deposits by law, acting as a sort of “mini-Fed” for North Dakota. According to reports, the BND is more profitable even than Goldman Sachs, has a better credit rating than J.P. Morgan Chase, and has seen solid profit growth for almost 15 years. The BND continued to report record profits after two years of oil bust in the state, suggesting that it is highly profitable on its own merits because of its business model. The BND does not pay bonuses, fees, or commissions; has no high paid executives; does not speculate on risky derivatives; does not have multiple branches; does not need to advertise; and does not have private shareholders seeking short-term profits. The profits return to the bank, which distributes them as dividends to the state.

The federal government could set up a bank on a similar model. It has massive revenues, which it could leverage into credit for its own purposes. Since financing is typically about 50 percent of the cost of infrastructure, the government could cut infrastructure costs in half by borrowing from its own bank. Public-private partnerships are a good deal for investors but a bad deal for the public. The federal government can generate its own credit without private financial middlemen.


Ellen Brown ends: “That is how China does it, and we can too”.

(Four years ago, Dr Ian Jenkins (Plaid Cymru) was proposing a Public Bank for Wales. There have also been calls for a public bank in Scotland, spurred on in part by anger at the damage done to the image of the nation by the actions of private banks such as RBS and HBOS. There have been articles in the Scotsman as well as lectures at the Royal Society of Arts in Edinburgh by public banking experts such as Ellen Brown of the American Public Banking Institute).





Birmingham’s Jewellery Quarter remembers Thomas Attwood

May 5, 2017

The Jewellery Quarter Walk, devised by Bob Miles, shows where, in the unsettled 1830s, under the leadership of Thomas Attwood, a series of vast public meetings held on Newhall Hill (below). were part of a campaign in which Birmingham played the leading role in achieving the Parliamentary reform which, Miles writes, almost certainly saved the country from revolution.

Thomas Attwood was called ‘the very first economist of the age’; he was arguing for twentieth century economic policies, such as the abolition of the gold standard and the expansion of the money supply to counter recessions, while the nineteenth century was still young. He was appointed high bailiff of Birmingham and as such he represented the town in opposing the East India Company’s monopoly of trade with the far east. This was an example of a powerful London interest which was content to damage business in the provinces in pursuit of gain.

As leader of a delegation from Birmingham which gave evidence to a House of Commons committee, Attwood proved an impressive witness and was prominent in persuading the government to change tack.

To the relief of Birmingham’s manufacturers the Orders in Council were revoked in 1812 and the East India Company’s monopoly was restricted. Attwood became an overnight hero in Birmingham.

The country was then in the throes of recession and he argued, as Keynes was still needing to argue over a century later, that Britain should have a paper currency not linked in value to gold. He further argued that the government should boost the economy in times of recession by increasing the money supply, a policy that US President Roosevelt most successfully applied, again over a century later, as part of his New Deal. Attwood’s argument was that the supply of money should be based, not on the quantity of gold held at the Bank of England, but on the productive capacity of the economy. In other words, the money supply should be so regulated as to be just sufficient to maintain full employment. In 1816 he campaigned for the Bank of England to increase the money supply by issuing more notes. There was a revival of trade, which William Cobbett attributed to Attwood’s influence.

In November 1825, a time of fevered speculation, Attwood wrote to the Prime Minister, Lord Liverpool, advocating the urgent preparation of a supply of £1 notes. On 16th December, the panic which Attwood had foreseen set in. Banks failed in all directions and there was a run on the Bank of England. It was only by the issue of the notes that had been produced with the benefit of Thomas Attwood’s foresight that the Bank of England itself was saved from collapse.

He led the Birmingham Political Union’s (BPU’s) campaign for Parliamentary reform which led to the Reform Act of 1832 and began the process of modernising British democracy.

William Dargue’s account of the local meetings is more detailed:

“Newhall Hill is most famous as the site of very large public meetings called by the Birmingham Political Union to campaign for parliament to pass a Reform Act which would draw more people into the democratic process.

“The current system of parliamentary democracy was rooted in a semi-feudal society, in time when the majority of people lived in the countryside and few people were literate. “By the 1800s literacy had spread considerably and almost half the population lived in towns and cities which had no parliamentary representation. The political unions demanded household suffrage and secret ballots, salaries for MPs, the abolition of the property qualification for MPs and triennial elections. The most famous meeting was that of 7th May 1832 which was attended by 200 000 people”.

The Reform Act was passed on 4th June 1832. Attwood returned to Birmingham from London a hero. Massive crowds turned out to welcome him; medals and mugs with ‘King Tom’s’ head on sold like the proverbial hot cakes.

In the general election held in the autumn of that year, he and Joshua Scholefield, another leader of the BPU, were returned unopposed – Birmingham’s first MPs.

Miles asks about the memorial; the city council put the relocated Sparkbrook statue into storage and Alderman Matt Redmond long pressed for the statue to be restored and restored to public  view, but it was said that the considerable funding needed for this was not available.

We hope that the more recent bronze statue, commissioned and donated to the city by his great, great, granddaughter and seen on this website’s header, will be replaced prominently in the redesigned Chamberlain Square as promised.





Bitcoin rising: are any readers using this virtual currency?

April 1, 2017

An earlier post informed us that Scotland’s David Low had decided to buy control of Scotcoin, which uses the same public database ‘blockchain’ technology as bitcoin. The USA has classified virtual currency as an asset for tax purposes and Israel has issued a draft which considers Bitcoin an asset, imposing VAT and capital gains tax on bitcoin transactions.

Now Japan has officially recognized bitcoin. New legislation that legitimizes digital currencies came into effect today (Saturday 1st April). The country’s financial regulator says bitcoin is fulfilling the function of a currency. More information on how it works is given here and about its  advantages and disadvantages here.

The first bill containing provisions for virtual currencies including Bitcoin, submitted to the Diet last March, amends the existing Payment Services Act and the Act on Preventing of Transfer of Criminal Proceeds. It defines virtual currencies including bitcoin and imposes certain regulations on virtual currency exchange services in order to prevent money laundering and terrorist financing as well as to protect users.

Ken Kawai of Anderson Mori & Tomotsune, a leading Japanese law firm confirmed that though Bitcoin is not considered a currency, being recognized by the government as a payment method will “likely have a positive effect on people’s mind and facilitate usage of VC’s [virtual currencies]”.

Japanese exchange Coincheck has revealed that its user base has risen from 14,000 users last April to 76,400 in January and there was rapid growth in the number of bitcoin-accepting merchants using its service.  Japanese giant GMO Internet group has recently announced that it would be developing a bitcoin exchange and wallet service. Japan now has the second-largest bitcoin trading volume globally, according to Coinhills.