Director,
T.E.(Terry)
Manning,
Schoener
50,
1771 ED
Wieringerwerf,
The
Tel:
0031-227-604128
Homepage:
http://www.flowman.nl
E-mail:
(nameatendofline)@xs4all.nl : bakensverzet
Incorporating innovative
social, financial, economic, local administrative and productive structures,
numerous renewable energy applications, with an important role for women in
poverty alleviation in rural and poor urban environments.
"Money is not the key that
opens the gates of the market but the bolt that bars them"
Gesell, Silvio The Natural
Economic Order
Revised English edition, Peter
Owen, London 1958, page 228
Edition 12:
This
project sets up a user friendly interest-free financial environment based on the
constructive recycling of a ten year interest-free loan and the creation of
local exchange trading systems.
Users
repay the interest-free loan after ten years. At that point of time they will
have been repaying the loan at the rate of approximately 3 EURO per family per
month for 120 months. Their repayments are, however, made in the local (formal)
currency. Should the local (formal) currency through inflation or exchange
measures have devalued against the EURO, the amount in local currency collected
by the users will not be sufficient to pay the original loan back . This
situation is beyond the control of the parties to the project, and in particular
of the users.
A
decision on how this risk is to be covered will therefore need to be made when
the project is being financed.
the
interest-free seed loan is expressed in (the local (formal) currency, or in
Euro, or in US$)
(LOAN
EXPRESSED IN LOCAL CURRENCY
If
the loan is expressed in the local (formal) currency, then the external bank
(working together with the local bank) will need to obtain the acceptance of the
lenders that the amount repaid, when reconverted into EURO, may be lower than
the original EURO loan.
The
following are four possibilities:
1)
The lenders or their governments formally accept they are willing to run this
risk and write off the eventual difference as a gift.
2)
The lenders agree to extend repayment time until the total amount collected in
the fund is sufficient to repay the whole loan expressed in EURO. This can lead
to a "win-win" situation in that the amount available for recycled micro-loans
would remain at a high level. In return for the extra monthly payments, users
have more money to recycle in micro-loans than would otherwise have been the
case.
3)
The lenders require payment of the available funds on expiry, and that the
difference be collected using the next following monthly payments, until such
time as the original amount expressed in EURO is balanced. This solution is
negative for users in that for a shorter or a longer period (depending on the
inflation which has taken place) users will not be able to benefit from
re-cycled micro-loans and on-going local development will slow down and could,
in some cases, even stop.
4)
The lenders require repayment of the available funds on expiry but reinvest any
difference for a further cycle of ten years. This will reduce users' funds for
renewing capital goods or extending services at the end of the second period of
ten years, but will not negatively affect recycling of micro-loans for on-going
local development under the project. )
(LOAN
EXPRESSED IN EURO OR IN US$
If
the loan were to be expressed in EURO, would users' monthly repayments be
indexed to the EURO? If so, how would the monthly rate expressing the amount
payable in EURO be determined, and by whom? How would the users be advised?
Were
repayments to be indexed to the EURO, the total amount collected by users over
the ten year period could, when converted into EURO, still be (considerably)
less than the total amount in EURO. This is because the indexing of the local
payments to the EURO is progressive over ten years while the exchange rate
applicable on repayment of the loan after the ten years' loan period is the one
applicable at the moment of the repayment. The difference would normally be less
than where the loan is expressed in the local currency, but one of the four
options mentioned above would have to be applied to it. )
Back: operation of local
money systems.
List of drawings and
graphs.
Typical list of maps.
List of key
words.
List of
abbreviations used.
Documents for
funding applications.