global fair finance

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A new Pittsburgh G20 Declaration in the Making by some coalition partners - ECRC prefers to concentrate on its Principles of responsible credit and will reissue its previous April Declaration to the G20

G20 Summit on Incentives, Investments and Institutions

There has been an extensive discussion among members of the Coalition for Responsible Credit and Community Reinvestment concerning a paper promoted especially by INAISE, the organisation of alternative and ethical banks in Europe for the upcoming G20 summit. A number of Coalition members have already signed this statement. ECRC has been approached to sign too. ECRC can only sign petitions if  they have been discussed among member, if their are in line with our principles of responsible credit and previous declarations: the 2008 Subprime, London and the 2009 G20 Declaration) which have been discussed among members of ECRC.

What is ECRC about?

The internal discussion in the steering committee has brought forward interesting differences which offer the opportunity to clarify the opportunities but also the limits of such a coalition as ECRC is.

1. ECRC is a coalition which looks at banks from a bank user perspective including consumer, money advice, welfare and labour organisations but also anti-poverty and environmental groups as well as scientific and state institutions. We also have a significant number of alternative financial institutions who try to organise their business in a responsible way meeting our requirements. We therefore welcome everybody who works together with us to promote these principles and more responsibility. But due to our worldwide activities we should refrain from soliciting any specific type of institution, whether called alternative, ethical, state or else. As this declaration especially promotes suppliers from the INAISE network (and not specific checked and monitored activities from these suppliers) I think it is not the task of the Coalition to support it. (see Citation at the end of this letter)

2. ECRC has focussed on the effects the crisis has on poor people in all three worlds. Although we always include the offer of responsible investment opportunities our perspective is basically the perspective of borrowers who have to use the offered capital productively in their lives, for the environment or other public and social goods. In so far old age pensions, educational savings are of major concern. But mere investments to increase one's own monetary wealth (which also in the alternative sector showed an important gain and overestimation during the last year) are therefore secondary even if there owners wish to add ethical purposes to it. To protect good intentions has been secondary to our efforts to protect good effects. The core element for us is credit and debt. It is the borrower and debtor who pays the price of the investment. He or she are the productive elements of our financial system. They merit our support. The declaration instead has a focus on investment.

3.  ECRC is  a coalition. Our partners have their own programmes and ideas. The tools they develop and propose for the financial system are adapted to their national cultural environment, to their traditions and to the specific goals of their organisation. ECRC should care to make such (best) practices known but it should not put one or the other tool as own goal into its policies. There are many flowers in the world and the more we have the better. The declaration is focussed on a number of such tools like CRA legislation, ethical banking and micro lending. These may be wonderful tools in one country but less important for another. It may serve some purposes and even be detrimental for others. It especially has the problem that the latter two instruments build a separate sector from mainstream banking and there is little empirical evidence about its general effects on the development of ethics and anti-discrimination in financial services. The strong support of such tools among those mainstream bankers who during the crisis have not shown social responsibility at all poses a problem to all those who are afraid that special mechanisms are often promoted in order to protect the mainstream mechanisms from being publicly scrutinized.

4. ECRC principles have only one principle on transparency and information but 6 principles concerning behaviour of banks and legal duties. This shows that we are sceptical what concerns the ability of markets driven by perfect information to work properly for the poor and for social as well as real life purposes. We promote a public responsibility for money systems which evaluates its merits by its outcome and not by its promises. The declaration is focussed on more private information, incentives and fiduciary obligations. Our focus was on affordability, productivity, adaptation of financial products. This is slightly different.

5. ECRC has always insisted that money is only a tool and not a value in itself. This attitude excludes that there is an absolute shortage of money. Instead even bankers speak about a general credit crunch which reduces our problems to a problem of shortage. Instead the problem lies more in the fact that the productivity people can provide for investors with using their money in their real lives, for their small enterprises or environmental purposes is too low and not sufficiently equipped with security in relation to investments into money markets and large scale activities. The effect is not primarily exclusion but a rise in interest rates and the demand for additional securities especially threatening personal goods like homes and wages and family guarantors. The declaration does not recognise these complicated mechanisms and overtakes the notion of a general credit crunch.

6. ECRC is a supranational coalition. We acknowledge that some problems are supra-national, other problems should better be solved on a national level by our own structure of a Coalition of national partners. But we should not promote in general just smallness or local institutions. We would miss the heart of the globalize economy and leave it to others.

Join our Coalition and support the principles - Organise national Conferences with the Coalition

Here is ECRC’s official G20 Declaration from London G20 Summit in April 2009. The additional INAISE-FEBEA-NCRC-GCRC Pittsburgh G20 Declaration: 12 measures for a socially useful financial system can be found here in English and French (Sept 2009)

ID: 44383
Publication date: 18/09/09

Created: 18/09/09. Last changed: 01/10/09.
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