A little Posted Article I ran across....................


Banking on the CommunityMoney as a Tool – Finance, Venture
Philanthropy, Trade and Economy
Money is imaginary.

More precisely, money is the tangible manifestation of an agreement
between you and other people that the oddly-colored piece of paper in your
hands has value. This lets currency rates slip and slide relative to
each other, as people try to agree on exactly what the value should be,
but it also has another implication. If you can find enough people to
agree on its value, you can make up your own money.

In 1998, the residents of the Palmeira District, a slum in Fortaleza,
Brazil, did just that. Setting up an organization called Association of
Neighbours of the District of Palmeira, the residents created a new
bank -- the Bancos des Palmas, or Palm Bank -- and a new currency, the
Palmas. The bank and currency not only succeeded, they have thrived.
The bank was set up to fight poverty and to improve the living
conditions of the residents of the district of Palmeira, through local economic
development, encouraging community mobilisation and the
re-establishment of community spirit. Before the bank was set up, local producers
rarely sold produce to their neighbours and the local residents tended to
buy their goods elsewhere. By increasing sales within the settlement,
the association hoped that small entrepreneurs would have more income and
be able to expand their enterprises, as well as giving the residents a
better deal.
The efforts to strengthen local businesses has been very successful.
According to an independent 2003 analysis (PDF) of the project by the
Dutch microcredit NGO Strohalm, while nearly a quarter of the district's
residents interviewed reported an initial reluctance to participate,
100% -- every person spoken with -- "stated that they have altered their
consumption patterns towards local products" as a result of the spread
of Palmas. Spending on local commerce jumped from 16% of purchases to
56%.

But the Palm Bank is more than currency: it's a source of microcredit
loans. In that, again, it has been wildly successful at improving the
lives of Palmeira residents. There are five types of loans: business
microfinancing; a special microcredit program for "at risk" women; the
PalmaCard (credit card); PalmaCasa (for renovating homes); and loans for
urban agriculture (such as backyard gardens). The programs have given
support to hundreds of Palmeira families. Most widely used is the
PalmaCard:
The PalmaCard enables families to obtain goods in local stores and not
have to pay for them until the following month, without interest and on
a date agreed by the family. This not only allows families to obtain
goods ahead of earnings, but also ensures local products and services are
bought, promoting economic growth among the community. This has
benefited at least 520 families and, during the first three months, sales of
local goods increased by 10 per cent, directly generating 20 new jobs.
Dropping out and creating a community currency is surprisingly common,
but doesn't always work; the Palm Bank experience is particularly
special. Nonetheless, the Palm Bank is a vivid demonstration that slums and
poverty are not due to some defect in the industriousness or desire for
a better life in the residents. Sometimes, changing the system is the
necessary course of action.

Article posted by H. Holt