Bottom-Up Financial Institutions

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Chilean economist Manfred Max Neef offers a vision of a financial system controlled from the bottom:

(from: Manfred max Neef, 1991, Human Scale Development)

“The financial institutions that may be concerned with local financing of Human Scale Development must state goals and forms of operation going far beyond conventional principles. In the first place, these institutions must promote local creativity and support community initiatives that are organized through solidarity, horizontal and equitable relationships. Second, they must encourage the greatest possible circulation of money at the local level. This means attracting locally generated surpluses and making them circulate as many times as possible within the local space, thus increasing the multiplier effect of a given level of deposits and savings. Third, these institutions must adjust themselves so that the savers, or the generators of surpluses, may decide on the use of their resources, thus allowing for a greater transparency in the relationship between saver and investor that may, in turn, promote greater participation in activities devoted to making development alternatives in the local space more viable. Fourth, these financial institutions must be managed in a cooperative way by people in the community itself, which means that the management should also be local in origin. Finally, if the local financial institution is to gain credibility, it must be protected against any potential liquidity crisis.” ([1])