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The community credit movement in Brazil

photo of Michel Bauwens

Michel Bauwens
16th December 2008


Via Bernard Lietaer:

3 minute, english-subtitled video on a community credit and local currency project in the northeast of Brazil. The video contains many local testimonies on how the project has revived their community.

The Banco Palmas, which has now 10 years of experience in the poorest part of Foraleza, is now in the process of being multiplied by the central bank in 150 different locations in the country, at the rythm of 10 per month. 23 are already operational, and they add another 10 in December, and another 10 in January…

Bernard Lietaer comments that:

Banco Palmas really isn’t a LETS system.

It is a dual currency microcredit bank which issues loans in both currencies, and is therefore much closer to the WIR than to LETS. No LETS has been able to grow beyond a few thousand people. The WIR can scale up, as it has now 65,000 members…

Below the video are more details.

A very detailed description of this experience is available.

Here are the specific details noted from the Guillaume blog:

* Banco Palmas, which was started and is managed by local residents, functions as a local credit union that issues low interest rate loans in the alternative currency, the Palma, and provides also a credit card for payment convenience.

* Access credit does not require documents, but only requires that local resident voucher for the loan. In other words, instead of relying on high-tech PhD risk analysis algorithm, CDS, securitization, and the likes, credit risk analysis is socialized.

* The bank funds consumption and production reports to be able to better determine what is needed by the community and provide market research for entrepreneurs.

* The alternative currency, the Palma, is backed by the national currency, and convertible at a 1% fee.

* The bank has established partnerships with local businesses, and many are providing discounts when paying in Palmas.

Here are also some amazing numbers from the report:

* In Ceará, sales in commercial establishments in the community increased by 40% In Ceará, sales in commercial establishment in the community increased by 40%

* Bankruptcy for local businesses involved with the Bank has never exceeded 3% Bankruptcy for local businesses involved with the bank has never exceeded 3%

* Crime rates in Ceará, compared to other neighborhoods in the city, are 5-6% lower Crime rates in Ceará, compared to other neighborhoods in the city, are 5-6% lower

* 900 new jobs were created in the formal and informal sectors since the beginning of the project 900 new jobs were created in the formal and informal sectors since the beginning of the project

* Of Banco Palmas clients, 82% feel more responsible; 95% consider the Bank an agent in the eradication of hunger and promotion of jobs and income; and 54% feel more solidarity with the community Of Banco Palmas clients, 82% feel more responsible; 95% consider the bank an agent in the eradication of hunger and promotion of jobs and income, and 54% feel more solidarity with the community

* 11 other municipalities are currently receiving training from Banco Palmas technicians to implant community banks in their cities 11 other municipalities are currently receiving training from Banco Palmas implant technicians to community banks in their cities.”

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