The JAK Members Bank, or JAK Medlemsbank, is a cooperative, member-owned

financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...

based in Skövde, Sweden, and based on a concept that arose in Denmark in 1931. ''JAK'' is an acronym for ''Jord Arbete Kapital'' in

Swedish Swedish or ' may refer to: Anything from or related to Sweden, a country in Northern Europe. Or, specifically: * Swedish language, a North Germanic language spoken primarily in Sweden and Finland ** Swedish alphabet, the official alphabet used by ...

or ''Land Labour Capital'', the

factors of production In economics, factors of production, resources, or inputs are what is used in the production process to produce output—that is, goods and services. The utilized amounts of the various inputs determine the quantity of output according to the relat ...

classical economics Classical economics, classical political economy, or Smithian economics is a school of thought in political economy that flourished, primarily in Britain, in the late 18th and early-to-mid 19th century. Its main thinkers are held to be Adam Smith ...

. A membership of approximately 39,000 (as of December 2015) dictates the Bank's policies and direction. The Board of Directors is elected annually by members, who are each allowed only one share in the bank. JAK Members Bank does not offer any interest on saved money. All of the bank's activities occur outside of the

capital market A capital market is a financial market in which long-term debt (over a year) or equity-backed securities are bought and sold, in contrast to a money market where short-term debt is bought and sold. Capital markets channel the wealth of savers t ...

as its loans are financed solely by member savings. Administrative and developmental costs are paid for by membership and loans. JAK banking employs the "Saving Points" system: members accumulate Saving Points during saving periods and use them when applying for a loan. The concept is that one is allowed to take out a loan for oneself to the same extent as one allows other people to be granted loans, saving into one's account. For this reason (applying for a loan), earned Saving Points must be equal to spent Saving Points to ensure sustainability. If a member is borrowing more saving points than they currently possess, they are obliged to continue accumulating "''aftersavings''" during the repayment period. Aftersavings are a fixed quota of money that a member must save ''after'' one's loan was made, so they can continue to earn Saving Points. This way, at the end of the repayment period, Saving Points earned will be equal to Saving Points spent, and at that time they will be able to have back all their aftersavings. JAK also offers a couple of loans where you do not need any saving points.

History

The co-operative society ''Jord Arbejde Kapital'' was founded in Denmark during the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

in 1931. The society issued a popular

local currency In economics, a local currency is a currency that can be spent in a particular geographical locality at participating organisations. A regional currency is a form of local currency encompassing a larger geographical area, while a community curren ...

which was subsequently outlawed by the Danish government in 1933. In 1934 it founded an interest-free savings and loan system and a

Local Exchange Trading System A local exchange trading system (also local employment and trading system or local energy transfer system; abbreviated LETS) is a locally initiated, democratically organised, not-for-profit community enterprise that provides a community infor ...

. Though both systems were forced to close, the savings and loan system re-emerged in 1944. The experience of JAK-banking in Denmark inspired a group in Sweden to develop a non-profit organisation named ''Jord Arbete Kapital - Riksförening för Ekonomisk Frigörelse'' (National Association for Economic Emancipation) in 1965. This pioneers' group developed a mathematical system based on Saving Points, designated the "balanced saving system". The association grew slowly at first. In 1997, a legislative amendment required the association to receive a

banking license A banking licence is a legal prerequisite for a financial institution that wants to carry on a banking business. Under the laws of most jurisdictions, a business is not permitted to carry words like a ''bank'', ''insurance'', ''national'' in th ...

from the Swedish Financial Supervisory Authority in order to continue operating as a financial institution, which was granted in that year. The bank's deposits are insured by the government.

Philosophy

According to JAK's philosophy, economic instability arises out of and is a consequence of the levying of

interest In finance and economics, interest is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate. It is distinct ...

. JAK operates under the following principles: * Interest moves money from the poor to the rich * Interest favours projects which yield high profits in the short term The main aim of the bank is to provide its members with a viable, feasible financial instrument, sustainable for the environment and serving the local economy.

Membership

Marketing for JAK is done primarily by volunteers and

word-of-mouth Word of mouth, or ''viva voce'', is the passing of information from person to person using oral communication, which could be as simple as telling someone the time of day. Storytelling is a common form of word-of-mouth communication where one pe ...

advertising. Deposits are accepted and loans are given in Swedish Krona ( SEK). Mortgages or personal guarantees may be made only if the property or the guarantor is Swedish. It is compulsory to have Swedish residency to apply for a loan from JAK. The savings of members are covered under the deposit guarantees of the Swedish banking system.

JAK in other countries

JAK organisations exist in Denmark, Germany and Italy, in addition to Sweden. There was also an earlier attempt to start such a bank in Norway. The Danish organisations, which date back to 1931, are known as ''J.A.K. Andelskasser'', and there are 14 independent organisations which hold the legal status of andelskasse, which is a form of bank in Denmark. They are all members of ''Landsforeningen J.A.K.'', the association of JAK organisations.

Literature

*Margunn Bjørnholt:
Pengene mot strømmen: Alternative finansieringsorganisasjoner
', Oslo, University of Oslo, 1995, , sida 82-129

References

External links

JAK Homepage

JAK Report in English
by Giorgio Simonetti
JAK Bank Italia,Italian Association
for to start interest-free banks in Italy

Video producer who shot a report about JAK bank in August 2007
Danish JAK Bank
In Denmark, JAK philosophy survives in many JAK local branches
German ethic financial cooperative
based in Stuttgart, inspired by JAK model.
How interest-free banking works: The case of JAK
- by Ana Carrie
JAK Bank Report
by Mark Anielski {{Authority control Microfinance companies Banks established in 1965 Banks of Sweden Freiwirtschaft Ethical banking Cooperative banking in Europe Cooperatives in Sweden Swedish companies established in 1965