Would Ron Paul approve of this bank???Submitted by Answer1984With1776 on Wed, 05/27/2009 - 15:39
Can a bank operate successfully if it does not charge interest on its loans?
The Swedish JAK Medlemsbank (Members' Bank) certainly does - it has been called the safest bank in Sweden. This account of how it does so is based on two visits to its headquarters in Skövde and numerous conversations with JAK's enthusiastic staff and members, both in Sweden and in Ireland. I am indebted to the staff of JAK for their hospitality and assistance, and to Feasta for its financial support.
JAK's primary objective is to provide its members with interest-free loans. In order to accomplish this, it must attract interest-free savings. JAK uses a system of "Savings Points" in order to balance saving and borrowing.
Given the choice of borrowing without interest or saving without interest, most of us would gladly choose borrowing. While people are generally willing to save temporary surpluses of money in current accounts that don't pay interest, few are willing or able to save more significant amounts over a long period of time with no compensation. JAK cannot, of course, lend money without having savings on deposit and so, using an imaginative system of Savings Points, each member who wishes to take out a loan must save money first and, over a lifetime with JAK, every member will have saved roughly as much money and for the same period of time as they will have borrowed. You could almost imagine JAK as allowing its members to borrow (interest-free) from their future selves.
For a new JAK member, the first step towards an interest-free loan is to save and thereby earn Savings Points. These are calculated as the amount saved, multiplied by the number of months for which it is saved, multiplied by a Savings Factor. This factor varies according to the type of savings account the member has selected and is lower (about 0.7) for a demand account from which savings can be withdrawn at any time. For example, assuming a Savings Factor of 0.9, we have1 :
€100 x 1 Month x 0.9 = 90 Savings Points
The Savings Factor varies with the type of deposit account and is lowest for demand accounts where savings can be withdrawn at any time (about 0.7).
rest of article here: http://www.feasta.org/documents/review2/carrie2.htm