BRATISLAVA, Slovak Republic—In 1845, cooperative pioneer Samuel Jurkovič founded one of Eastern Europe's first credit unions in the village of Sobotište in what is now the Slovak Republic. Today, there are no credit unions left in the village, according to Dana Ceranova, Sobotište's mayor. As a result, the village's inhabitants are paying higher prices for financial services, a situation the global credit union movement would like to change.
Ceranova and a small group of grassroots organizers want credit unions to return to the Slovak Republic, and have enlisted aid from World Council of Credit Unions (WOCCU) and the National Association of Cooperative Savings & Credit Unions (NACSCU), WOCCU's membership organization in Poland, to work with the republic's national government to establish proper regulatory standards that will help credit unions to once again flourish.
"There is no legislative framework for credit unions here," explained Leonard Hölbling, board member of the Slovak Association of Savings Cooperatives (SASC), which is helping spearhead the initiative. "We want to establish the proper legislative framework informed by international best practices."
Credit unions have spread throughout Eastern Europe during the past two decades thanks to the combined efforts of WOCCU and NACSCU, which itself has provided extensive credit union development assistance in Belarus, Macedonia, Moldova, Russia, and Ukraine. Thanks to a high level of interest on the part of its people, the Slovak Republic may be the next country to experience the growth of financial cooperatives, explained Brian Branch, WOCCU's executive vice president and chief operating officer.
"Two things must exist for credit unions to thrive-interest and support of the people being served and the proper legislative and regulatory infrastructure," explained Branch, who last week visited the country with Pawel Grzesik, plenipotentiary head of NACSCU's Warsaw office. "Slovakians have expressed an interest, and our hope is that we can help them affect the proper legislative and regulatory solutions."
In support of SASC, Branch and Gresik met with officials from the republic's Central Bank, Ministry of Finance, Ministry of Foreign Relations and Parliament in Bratislava to discuss policy framework for credit unions in a country dominated by urban retail banking. The delegation stressed the benefits of credit unions as lower-cost consumer alternatives outside of urban areas, particularly in villages like Sobotište.
As cost-effective alternative providers, credit unions exert competitive pressure on rates and fees while maximizing value to consumers rather than profits for shareholders, Branch told participating government officials, including Miroslav Číž, vice president of the republic's Parliament. Greater access to affordable financial services can help families and communities thrive, providing greater economic stabilization and growth where they are allowed to flourish, he added.
Slovak Republic policy makers expressed some concerns based on previous experiences with financial speculators and manipulators who used cooperative models to disguise pyramid schemes that negatively affected the country's economy. Local credit union organizers and delegation members explained how cooperative governance principles and prudential regulations properly exercised can better control risk and ensure the true cooperative management of registered credit unions.
"Mr. Číž responded that the Slovak Republic needs credit unions' social outreach to serve marginalized populations currently being ignored by banks," Branch said. "He agreed to support credit union development to accomplish this goal."
Four savings cooperatives currently exist in the republic. All are registered under a civil code that allows them to accept member deposits to invest in the stock market, but does not allow them to make member loans. "We want to be able to offer the full package of financial services like a real credit union," Hölbling explained.
The Slovak Republic is the latest in WOCCU's ongoing collaboration with NACSCU to develop credit unions. Efforts to help the republic's growing credit union movement will draw heavily on NACSCU's past successes within the region, Branch said.
"NACSCU is a textbook example of credit union success in Eastern Europe and has provided critical leadership in helping Poland's neighboring countries find ways to extend credit union services to their people," Branch said. "I am confident that together we can help the Slovak Republic re-establish its credit union movement."
World Council of Credit Unions is the global trade association and development agency for credit unions. World Council promotes the sustainable development of credit unions and other financial cooperatives around the world to empower people through access to high quality and affordable financial services. World Council advocates on behalf of the global credit union system before international organizations and works with national governments to improve legislation and regulation. Its technical assistance programs introduce new tools and technologies to strengthen credit unions' financial performance and increase their outreach.
World Council has implemented more than 290 technical assistance programs in 71 countries. Worldwide, 56,000 credit unions in 101 countries serve 200 million people. Learn more about World Council's impact around the world at www.woccu.org.