JAK members bank
Encyclopedia
The JAK Members Bank, or JAK Medlemsbank, is a cooperative, member-owned financial institution based in Skövde
, Sweden
. JAK is an acronym for Jord Arbete Kapital in Swedish
or Land Labour Capital.
A membership of approximately 38,000 (as of november 2011) dictates the bank's policy and direction. The Board of Directors is elected annually by members, who are each allowed only one share of the bank. JAK Members Bank does not charge or pay interest on its loans
, a principle it shares with Islamic banking
. All of the bank's activities occur outside of the capital market
as its loans are financed solely by member savings. As of 2008 members saved 97 million Euros, of which 86 million are given as loans to members. Administrative and developmental costs are paid for by membership and loan fees.
JAK banking is made possible by saving points system: members accumulate saving points during saving periods, they use saving points asking for a loan. The main idea is that one is allowed to take a loan for himself in the same measure he allows other people to have loans, saving into his account. For this reason (asking for a loan), earned saving points must be equal to spent saving points to ensure sustainability. If a member is borrowing more saving points than he has, he is obliged to continue accumulating so-called "aftersavings" during repayment period. "Aftersavings" are a fixed quota of money that one must save after his loan was given, so they can continue earning saving points. This way, at the end of the repayment period, earned saving points will be equal to spent saving points, and at that time he will be able to have back all his aftersavings.
in 1931. The society issued a popular local currency
which was subsequently outlawed by the Danish government in 1933. In 1934 it founded an interest-free savings and loan system and a Local Exchange Trading System. Though both systems were forced to close, the savings and loan system reemerged in 1944. The experiments with JAK banking in Denmark inspired a group in Sweden to develop a non-profit named Jord Arbete Kapital - Riksförening för Ekonomisk Frigörelse (National Association for Economic Emancipation) in 1965. This pioneers' group developed the mathematical system based on saving points, called "balanced saving system". The association grew slowly at first and only received a banking license
from the Swedish Financial Supervisory Authority at the end of 1997.
.
JAK operates under the following premises:
The ultimate goal of JAK is to abolish interest as an economic instrument and to replace it with
instruments that are in the best interest of people. First aim of the bank is to offer a feasible financial instrument to its members, sustainable for the environment and serving local economy.
advertising. Nearly 550 members organized in 28 local branches work without pay spreading the JAK idea and searching for new members. Deposits are accepted and loans are given in Swedish Krona (SEK
). Mortgages or personal guarantees may only be given if the property or the guarantor is Swedish. It is compulsory to be resident in Sweden to apply for a loan with JAK. The savings of members are covered under the deposit guarantees of the Swedish banking system.
Skövde
Skövde is a locality and the seat of Skövde Municipality, Västra Götaland County, Sweden with 34 446 inhabitants .Skövde is situated some 150 km northeast of Gothenburg, between Sweden's two largest lakes, Vänern and Vättern. It sits on the eastern slope of a low mountain ridge Billingen ,...
, Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
. JAK is an acronym for Jord Arbete Kapital in Swedish
Swedish language
Swedish is a North Germanic language, spoken by approximately 10 million people, predominantly in Sweden and parts of Finland, especially along its coast and on the Åland islands. It is largely mutually intelligible with Norwegian and Danish...
or Land Labour Capital.
A membership of approximately 38,000 (as of november 2011) dictates the bank's policy and direction. The Board of Directors is elected annually by members, who are each allowed only one share of the bank. JAK Members Bank does not charge or pay interest on its loans
Usury
Usury Originally, when the charging of interest was still banned by Christian churches, usury simply meant the charging of interest at any rate . In countries where the charging of interest became acceptable, the term came to be used for interest above the rate allowed by law...
, a principle it shares with Islamic banking
Islamic banking
Islamic banking is banking or banking activity that is consistent with the principles of Islamic law and its practical application through the development of Islamic economics. Sharia prohibits the fixed or floating payment or acceptance of specific interest or fees for loans of money...
. All of the bank's activities occur outside of the capital market
Capital market
A capital market is a market for securities , where business enterprises and governments can raise long-term funds. It is defined as a market in which money is provided for periods longer than a year, as the raising of short-term funds takes place on other markets...
as its loans are financed solely by member savings. As of 2008 members saved 97 million Euros, of which 86 million are given as loans to members. Administrative and developmental costs are paid for by membership and loan fees.
JAK banking is made possible by saving points system: members accumulate saving points during saving periods, they use saving points asking for a loan. The main idea is that one is allowed to take a loan for himself in the same measure he allows other people to have loans, saving into his account. For this reason (asking for a loan), earned saving points must be equal to spent saving points to ensure sustainability. If a member is borrowing more saving points than he has, he is obliged to continue accumulating so-called "aftersavings" during repayment period. "Aftersavings" are a fixed quota of money that one must save after his loan was given, so they can continue earning saving points. This way, at the end of the repayment period, earned saving points will be equal to spent saving points, and at that time he will be able to have back all his aftersavings.
History
The co-operative society Jord Arbejde Kapital was founded in Denmark during the Great DepressionGreat Depression
The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...
in 1931. The society issued a popular local currency
Local currency
In economics, a local currency, in its common usage, is a currency not backed by a national government , and intended to trade only in a small area. As a tool of fiscal localism, local moneys can raise awareness of the state of the local economy, especially among those who may be unfamiliar or...
which was subsequently outlawed by the Danish government in 1933. In 1934 it founded an interest-free savings and loan system and a Local Exchange Trading System. Though both systems were forced to close, the savings and loan system reemerged in 1944. The experiments with JAK banking in Denmark inspired a group in Sweden to develop a non-profit named Jord Arbete Kapital - Riksförening för Ekonomisk Frigörelse (National Association for Economic Emancipation) in 1965. This pioneers' group developed the mathematical system based on saving points, called "balanced saving system". The association grew slowly at first and only received a banking license
Banking license
Under most jurisdictions, a banking license is a prerequisite for a financial institution that wants to provide banking services, such as taking deposits from the general public....
from the Swedish Financial Supervisory Authority at the end of 1997.
Philosophy
According to the JAK philosophy, economic instability is a result of the taking of interestInterest
Interest is a fee paid by a borrower of assets to the owner as a form of compensation for the use of the assets. It is most commonly the price paid for the use of borrowed money, or money earned by deposited funds....
.
JAK operates under the following premises:
- The taking of interest is inimical to a stable economy
- Interest causes unemployment, inflation, and environmental destruction
- Interest moves money from the poor to the rich
- Interest favours projects which tend to yield high profits in the short-term
The ultimate goal of JAK is to abolish interest as an economic instrument and to replace it with
instruments that are in the best interest of people. First aim of the bank is to offer a feasible financial instrument to its members, sustainable for the environment and serving local economy.
Membership
Marketing for JAK is done primarily by volunteers and word-of-mouthWord of mouth
Word of mouth, or viva voce, is the passing of information from person to person by oral communication. Storytelling is the oldest form of word-of-mouth communication where one person tells others of something, whether a real event or something made up. Oral tradition is cultural material and...
advertising. Nearly 550 members organized in 28 local branches work without pay spreading the JAK idea and searching for new members. Deposits are accepted and loans are given in Swedish Krona (SEK
Swedish krona
The krona has been the currency of Sweden since 1873. Both the ISO code "SEK" and currency sign "kr" are in common use; the former precedes or follows the value, the latter usually follows it, but especially in the past, it sometimes preceded the value...
). Mortgages or personal guarantees may only be given if the property or the guarantor is Swedish. It is compulsory to be resident in Sweden to apply for a loan with JAK. The savings of members are covered under the deposit guarantees of the Swedish banking system.
External links
- JAK Homepage
- JAK documentary in Spanish by Mario León
- JAK Report in English by Giorgio Simonetti
- JAK Bank Italia,Italian Association for to start interest-free banks in Italy
- Video interview of JAK founder Åke Mobrandt shot by Giorgio Simonetti (Swedish with English translation by Eva Stenius)
- Giorgio Simonetti's Homepage, Video producer who shot a report about JAK bank in August 2007
- Danish JAK Bank. In Denmark, JAK philosophy survives in many JAK local branches
- NORDISKA SPARLÅN Swedish association similar to JAK, founded by Per Almgren, post-savings system's inventor.
- German ethic financial cooperative based in Stuttgart, inspired by JAK model.
- How interest-free banking works: The case of JAK - by Ana Carrie
- Swedish association aimed at helping foreign countries to start interest-free banks
- JAK Bank dissertation by Mark Burton
- JAK Bank Report by Mark Anielski