CUs can help economy

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Foyle Sinn Féin MLA RAYMOND McCARTNEY argues that Credit Unions have the potential to ease the pressure on the local economy if they are allowed to offer a greater range of financial services and calls for new legislation to be put in place to allow them to do so.

I welcome Minister Arlene Foster’s statement on reform of Credit Union regulations.

I believe that the Credit Union movement has the potential to ease the pressure on the local economy.

The Credit Union Movement was introduced to Ireland in the 1960s by community activists concerned at the disadvantage experienced by working class people in accessing credit.

The same motivation should now be applied to inject momentum into the local economy and offer a lifeline to Small and Medium Enterprises (SMEs) and the social economy.

In the present economic downturn, government focus seems to be on protecting the interests of the large financial institutions. Until now there has been little attention given to assisting those most directly affected by the present financial conditions - SMEs and the workers whose labour made a major contribution to the economic prosperity squandered by developers, speculators and banks over recent years.

Sinn Féin introduced a motion to the Assembly in 2008 calling on the Minister to ‘bring forward, as a matter of urgency, proposals to remove the legislative barriers which prevent Credit Unions from offering a wide range of financial services which could assist those in financial need in the current economic climate.’

I, therefore, welcome the statement by the Minister and will observe with interest the progress of the proposals contained in the proposed Bill as it passes through the Assembly.

I believe that what we need - rather than an economy controlled by the self-interest of large banks far removed from the reality of the everyday needs of the local economy and propped up by taxpayers money - are small local banks tailored to cater for SMEs and the social economy.

A good example is the local saving banks, or ‘Sparkassen’ as they are known in Germany, which form an integral part of a strong local economy.

Other examples of community banks/financial institututions that provide extended financial services to local enterprise are the Caja in Mondragon; the Mouvement Cooperatif Acadien in New Brunswick; the Solidarite in Quebec; the Algoma in Ontario; and the Fair Finance Consortium in England.

Imbued with a sense of community empowerment they provide finance to the SME sector, community organisations, sporting bodies and social projects which are at the heart of local economies.

For example, between June 2009 and March 2011, German ‘Sparkassen’ loaned more than £15 billion, much of which went to SMEs. I believe that we have the nucleus for such a local banking system in the Credit Union Movement.

Being community-based, Credit Unions are probably the most secure of financial institutions given the fact that they are not driven by the pressure to deliver massive dividends to bondholders.

If given the power to extend operating credit facilities to SMEs, I have no doubt it would inject major impetus for growth into local business.

It is quite possible that, had a number of local businesses forced to close in the past number of years had access to a line of credit through enhanced credit facilities from the Credit Union, we may not have the number of vacant premises and failed business that we have.

The Executive is on record in support of increased financial facilities for Credit Unions and the Minister’s proposed Bill will, hopefully, deliver on that support.

Credit Unions have, since the early 60s, provided accessible finance for families and individuals and would, if properly empowered through legislation, be able to do likewise for SMEs and provide a lifeline to local economies in the present context.

They could also provide much needed investment in social economy projects that would help regenerate communities.

But each stage of the proposed Bill will require close scrutiny to ensure that it is free of unnecessary bureaucratic British Treasury rules that do not take account of our unique economy.