Brazil slum a beacon for economic independence
By Stuart Grudgings
FORTALEZA, Brazil (Reuters) - At a time when big financial firms are reviled by many for leading the world into crisis, a ramshackle bank on a potholed street has lessons in economic independence that are catching on around the world.
With its own money, the palma, that is trusted and heavily used, many of the 32,000 residents of the Palmeiras slum in the northeastern Brazil city of Fortaleza go days without seeing or using Brazil's national currency.
Backed by the community bank that hands out zero-interest loans in the currency, the 11-year old palma is accepted by businesses throughout the area, whose residents credit it with transforming the local economy. It has spawned more than 30 linked community banks from the Amazon region to southeastern Espirito Santo state, up from just two in 2005.
And lately, Palmeiras residents say, the palma has shielded them from the crisis fallout spreading through Latin America's biggest economy, where millions of poor struggled to get access to credit even before the financial turmoil struck.
"The palma has helped people get over this crisis, the loans have helped give people continuity," said Joan Perreira de Souza, the 46-year-old owner of a local supermarket that has expanded in recent years thanks to loans made in palmas.
"It's not total protection but it is very significant."
Experiments in local currencies and trading schemes, whose backers say they work by keeping wealth within a community and strengthening local ties, have been around for decades.
But the crisis has sparked a new wave of interest in such models as communities, including in the United States and Europe, seek to insulate themselves from the credit crunch. Continued...