transcribed by Katherine Baldwin
Andi Hazelwood: This is Andi Hazelwood for Global Public Media, on the 16th of October, 2007, and I'm speaking with Oscar Kjellberg of the JAK Members Bank, an interest-free savings and loan in Sweden. Oscar, thank you very much for joining me.
Oscar Kjellberg: Thank you.
Andi Hazelwood: First, could you please tell our listeners what JAK stands for.
Oscar Kjellberg: JAK stands for land, labor and capital. The reason is that money makes trade with products very easy, but it can be made and used in many ways. It's a tool, and like any tool it can be used for good or bad. JAK was for people who want to use money in a just and sustainable way. We have had that since the Danish thought it in 1931, and the idea was taken over to Sweden in 1965. So we've been operating the savings and loan since '65.
Andi Hazelwood: So how does JAK bank work that's different than the conventional system?
Oscar Kjellberg: It's an interest-free savings and loan system, and it's a cooperative bank. The members borrow at no interest, and the loans are financed by the members' deposits. Let's say I borrow you $53 per year, and you pay me back $1 per week. I'm helping you, but what's in it for me? If you pay me $2 per week instead, one as a lead payment and the other that you are saving with me, then you are giving me a resource to use during the year and when the loan is repaid you get your savings back. If you would have borrowed this from a commercial bank, the rates would have been about the same per week, but you would not have had any savings at the end of the year. This is one of the reasons why we are doing this. It's cheaper, and we are saving money instead of paying it as an interest to commercial banks.
Andi Hazelwood: In a sense, this makes the members of JAK Bank, bankers themselves, because they're loaning, and also borrowing the money as well.
Oscar Kjellberg: Yes, that's true, and it's a cooperative bank, so they own the bank. There are no external owners that need to have a profit of it.
Andi Hazelwood: How does JAK Bank actually make any money, or do they?
Oscar Kjellberg: Well the borrower pays a loan fee that makes the effective rates of capital costs 2.5%. It's not interest, it's just a figure you can use to compare with other loans and credit. Interest-free means that nobody has the privilege to get paid just by money. The borrower pays only for administration, information and for the development for the interest-free economy.
Andi Hazelwood: The 2.5 effective rate of interest isn't compounded, is that correct?
Oscar Kjellberg: No, it's not compounded. To make a loan, we make a calculation of what we're going to pay, and what principal you're going to pay, and how much you have to pay, and then this is not changed during the whole period of repayment. We find this at the start, and we stick to those figures all the time. If a person wants to borrow 100,000 for, and this is in Sweden, for ten years, then you would pay principal -- The principal would be 833 per month. The loan fee would be 109, and the savings would be 833. So every month, you would be paying 1,775. After ten years, you would have repaid the loan, and you would have also 100,000 in savings to take out and use.
Andi Hazelwood: How many members are there?
Oscar Kjellberg: We have 33,000 members.
Andi Hazelwood: That's all across Sweden?
Oscar Kjellberg: Yes. It's like a telephone bank. We have an office, but people don't go there. We use by mail or post or telephone.
Andi Hazelwood: Who are your main customers? Are they individuals or small businesses?
Oscar Kjellberg: About 85% of the loans goes to ordinary house-holds, and the rest goes to organizations, small companies, mostly non-profit.
Andi Hazelwood: When someone applies for a loan, how are they assessed for approval?
Oscar Kjellberg: In that case, it's actually like in other banks. We have to check that they are able to repay the loan, and normally we take a security for the loans here. So there's no difference to other commercial banks in that sense. We are lending the other members' money, and we need to make sure that the money comes back.
Andi Hazelwood: Do you have many cases of defaults?
Oscar Kjellberg: Not many, no. The credit losses are more in the commercial banks. I've seen some members, if they have problems, and they have loans in several banks, they will pay JAK in the first place.
Andi Hazelwood: Do any JAK members keep no-interest savings accounts without also borrowing from the bank?
Oscar Kjellberg: It happens, yes, but they don't get anything out of it, except they know that they are supporting the system, and they choose that instead of having the money with the commercial bank.
Andi Hazelwood: How is the JAK model different from Islamic banking?
Oscar Kjellberg: Islamic banking is like investment bank, but JAK is the savings and loan bank. We give out loans. Islamic banks don't give out loans, and in an Islamic bank, the saver is actually buying shares and sharing the profit and loss with the one who's using the money. So Islamic bank is an investment bank, and JAK is a savings and loan bank.
Andi Hazelwood: To your knowledge, has the JAK model been implemented anywhere else in the world?
Oscar Kjellberg: No, it's only in Denmark and Sweden so far.
Andi Hazelwood: In your opinion, what role should money play in a sustainable future?
Oscar Kjellberg: It should play the same role, but we shouldn't use interest. Interest gives the lender a privilege, which is paid by those who are borrowing money. The privilege is to get paid for owning money, not for doing anything, not for risking anything. That's not just. Then you have the growth imperative, too, with just base money. I think people are getting aware of that now. When you lend money at interest, and the money supply consists mainly of credit, when the loans are going to be paid back, there's not money enough. It's money for the principal, but not for the interest, and that's not really a problem as long as what you are using the money for is also increasing. But we're reaching now a level of production in the world, where we are hitting the ecological limit, and then we're really in trouble.
Andi Hazelwood: How does this relate to the currency and mortgage crisis that's currently happening in the United States?
Oscar Kjellberg: Private banks are lending money at interest and the monetary supply has to grow all the time to avoid a crisis and in order to avoid inflation, all use of the money also has to grow. It has been growing for a long time, but now we are reaching the limit, so we have a problem. There is exponential growth in both the monetary supply and in production, in GDP. We are coming close to the peak oil, and the price of energy and metals and food is going to increase, and we'll have a problem.
Andi Hazelwood: Is there anything else that you'd like to add?
Oscar Kjellberg: I think you got the most important part there.
Andi Hazelwood: Alright, Oscar Kjellberg, thank you very much.
Oscar Kjellberg: Thank you very much.
Andi Hazelwood: This is Andi Hazelwood for Global Public Media.
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