Credit Unions: Philosophy, Policy and Regulation
This presentation discusses the philosophy, policy and regulation of credit unions (CUs), focusing on the Central Eastern Europe (CEE) and the New Independent States (NIS).
- Defines CUs;
- Lists countries in Europe that have CUs as well as those that have cooperative financial institutions;
- Describes the following philosophy and operating principles of CUs:
- Open entry/exit of member owners;
- Equal rights, responsibilities and treatment;
- One member, one vote;
- Business with members only;
- Joint holding of institutional capital and reserves;
- Limited return on member shares without equity appreciation;
- Liquidation of assets without profit to members.
The presentation analyzes:
- Differences between CUs and banks/ non-government organizations (NGOs);
- CU governance structure;
- Common bond amongst CUs - the diverse financial needs of open membership and commitment to help one another;
- Sources of credit union funds;
- Sustainable growth formula for CUs: promotion of thrift through incentives;
- CU services;
- Means of ensuring long-term viability of CUs through formal regulation;
- Need for regulations to reflect model CU needs;
- Sustainable development concepts for CUs;
- The ‘CU crisis’ in the Czech Republic and lessons that other CUs can learn from it;
- CU challenges in the region.
The presentation concludes by identifying the following legislative and regulatory priorities in the CEE/NIS:
- Law for CUs;
- Becoming part of the financial sector;
- An adequate regulatory and supervisory framework.