Two new studies from the International Labour Organization (ILO) and the New Economics Foundation (NEF) highlight the power of financial co-operatives, their resilience in the crisis, the central role of their members, their stable credit offering to small businesses and households, and their growing client base.
The studies were presented during dialogue with academics and stakeholders at the European Parliament in Brussels organized by the European Association of Co-operative Banks (EACB), the voice of 4,000 co-operative banks in Europe.
Top researchers from renowned institutes and universities in several European countries presented new evidence on the sector. Prof. Birchall, the author of the ILO report, declared that “the banking crisis confirmed that financial co-operatives are stable and risk averse”. “Most came through without needing government bailouts, without ceasing to lend to individuals and businesses and with the admiration of a growing number of people disillusioned with ‘casino capitalism’.”
The importance of co-operative banks and their role was also highlighted by the Vice-President of the European Parliament, Gianni Pittella during his keynote speech “Co-operative banks have proven to be sound and reliable during the crisis and they have greatly contributed to the systemic stability of the EuroZone. There is now a consensus on the need to preserve business model diversity in the European banking sector. The establishment of a genuine Banking Union should take into account this diversity in order to improve the resilience and stability of the banking industry”.
Lack of recognition
Simel Esim, Chief of the ILO’s Co-operative Branch, commented that the economic contribution of financial co-operatives, “although substantial, is often undervalued, and sometimes completely ignored, yet some of the largest banks in the world are co-operatives.”
Hervé Guider, EACB General Manager, emphasized that: “Owned and controlled by their 56 million members, the 4,000 co-operative banks in Europe are crucial in these challenging times to finance local communities, small businesses and households with a long-term approach. However – although local values and the importance of diversity are being rediscovered- the global nature of regulation strives towards uniformity. This is to the detriment of our banks. We need an enabling regulatory framework that takes into account our local structures”, he added, referring to the banking reforms being undertaken.
The international academic community is key to increasing awareness about the sector, achieving its full recognition and bringing about a shift in mentality that translates diversity from an abstract concept to concrete policy and economic measures. In acknowledging this, the EACB has launched several initiatives to foster new thinking about the sector, including an award for young researchers. The winners will receive their awards at the next EACB Convention on co-operative banks (early 2014).