The Credit Cooperatif is a banking group based in France that is owned by its clients and supports small businesses, trade associations and co-operatives. It finds its origins in the Social Economy movement in the late 19th century that led to the creation of today’s large mutual banking groups. As such, the Credit Cooperatif is committed to innovate on a regular basis in the area of responsible financial services linked with solidarity mechanisms. In addition to public aid for development, the bank works to find innovative contributions that ensure long term and stable funding for cooperation and development.
Last year, the Credit Cooperatif introduced a Voluntary Contribution on Currency Transactions (VCCT). The VCCT is based on the volume of the interbank currency transactions (spot and outright on Foreign Exchange market) processed by the Crédit Coopératif at a rate of 0.01%. Clients are not affected by any modifications of their commercial rates regarding these transactions: the Crédit Coopératif bears the full cost of the contribution
The implementation of the VCCT follows several projects and services raising funds for civil society based on a contribution in proportion of a volume of activity implemented in the previous years.
The VCCT rate of 0.01% is applicable to any interbank foreign exchange transactions performed by the voluntary bank. The figure was established on the basis of the main reports on innovative financing to establish this mechanism, including those dealing with various projects of financial taxes. While, most studies recommend a rate of 0.005%, this rate would apply to each of both currencies (bought currency and sold currency, which is equivalent of an effective rate of 0.01% for each transaction). As such, the rate of 0.01% has been selected. At a global scale, this rate would not impair liquidity seriously and it would be still able to raise significant amount of money for sustainable development.
The Crédit Coopératif foots the cost for the VCCT. The bank calculates the whole sum of transactions processed during the year, applies the rate of 0.01%, and the result is deducted from the global results of financial activities.
The Crédit Coopératif seems to be the first bank to voluntarily apply such a mechanism. The VCCT is based on a common methodology in order to pool the funds raised this way and discuss which organizations could benefit this fund in order to achieve the Millennium Development Goals (MDGs). The Crédit Coopératif is eager to associate with other voluntary banks to increase the potential impact of this innovative financing.
For 2011, as in full-year equivalent, Crédit Coopératif believes that an amount of EUR 100 000 can be reached. If the amount seems small, it is worth considering the relative size of a bank like the Crédit Coopératif and a relative volume of actions on financial markets.
At the end of first year, the EUR 82 000 have been raised via the mechanism. The representatives of Crédit Coopératif members decided to allocate the amount to one project led by the GERES in the Indian Himalayas for a three year partnership. This amount will support a project aiming at the construction of 1,000 passive solar buildings by installing energy-efficient technology to domestic and community housing and improving winter living conditions of rural communities in the cold regions of the Indian Himalayas.
According to reports from the Committee of Experts to the Taskforce on International Financial Transactions and Development, a levy of 0.01% on foreign exchange transactions including the four major currencies (£,$,€,¥) would collect USD 33.41 billion per year. Other mechanisms are proposed in their different reports.
This mechanism is reproducible. A coalition of voluntary banks could gather at European or global scale in order to set a common methodology and dialogue with actors which contribute to reach Millenium Goals. These voluntary banks would demonstrate it is possible to have banking and financial activities in “a different way”.
Wiping the slate clean: no climate justice without debt justice for Africa
Thursday 25th May marks Africa Day. However, a debt crisis exacerbated by climate change threatens to undo decades of development progress.
Climate finance isn't enough. We need debt cancellation
As G7 finance ministers meet in Japan, our friends at Debt Justice outline why the global north must end climate usury