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Lecturer: Masaki Kimura, representative director of the community youth bank momo.

There are three areas where we deal with money in our daily lives: the purchase of goods or services; earnings from employment; and through investments or savings. Approaches to create an ecological money flow in each of these areas are now being discussed. For example, in the purchase of goods or services, there is a method called fair trade. For employment, the popularity of eco-shushoku (ecological employment), which is a way of working to change the money flow towards a sustainable society, particularly with regard to the environment and human rights, is growing. For investments and savings, it is possible to choose financial institutions based on Social Responsibility Investment or environmental-friendliness. Today, I would like to focus on savings in these three areas and discuss the ways that money can enrich regions.

Traditional Money Flow

One quarter of Japanese people deposit money in major banks, 21% deposit money in postal savings, and 18% deposit money in local banks; this accounts for two-thirds of the Japanese population. One feature of such financial institutions, which other industry sectors usually do not have, is bank credit creation. Thanks to this feature, financial institutions are able to manage assets and they have a greater social impact.

Where does the money that we deposit into financial institutions flow? When you look at the deposit-loan ratio, which shows the rate of loaned money depending on deposits by district, loaned money exceeding the amount of deposits happens only in Tokyo, and in other area, loaned money falls below the amount of deposits. This indicates that money in the countryside is siphoned by Tokyo: local money does not flow in the region.

Deposits siphoned from the countryside are used, for example, to finance large companies in Tokyo. They might be used as promotion for nuclear power plants via large energy companies, or they might be related to structures that create major debtor via consumer finance companies. Good or bad, it is certain that this markedly affects the environment or society. That means that money has a far greater influence on reality than words. A disadvantage of typical saving deposits is that you cannot follow the flow of the money you put, and there is no option for depositors to specify how their money is used. This is the traditional money flow.

On the other hand, there is a way you can control the flow of your money, for example, providing it to companies conducting business that is not related to environmental disruption or the abuse of human rights, moving it to nearby regions or using it to address social problems. This is known as "eco-money saving." A nongovernmental organization, A SEED JAPAN, where I worked as an executive director, conducts a campaign to collect declarations for reconsidering the financial institutions and carrying out "eco-money saving." They have collected declarations from over 1,000 people between March 2005 and December 2007, which accounts for savings of over 702 million yen (about U.S.$6.69 million) . Because the NGO is located in Tokyo, most of the participants put their money in major banks before the declarations; however, since making the declarations, they have changed to labor banks or credit unions, and some have even changed to nonprofit organization (NPO) banks. As the NGO does not concretely recommend specific banking institutions for this campaign, the campaign creates an opportunity for depositors to think about the money flow.

What is an NPO Bank?

In October 2005, I established an NPO bank momo, which was the first NPO bank in the Tokai region and it was based in Nagoya Prefecture, where I was born and raised. An NPO bank is a finance system that collects money as investment from various sectors, such as citizens, NPOs, and companies, and it lends the money to social businesses, such as NPOs or community businesses. There are nine NPO banks in Japan, and momo is located the far west. It will soon expand to Kumamoto Prefecture.

One of the features of NPO banks is the method of screening. For finance loans at normal banks, historical performance is valued; however, in the case of NPO banks, the future of businesses, which is how the finance loan will affect businesses or regions, is valued in addition to historical performance. Members of screening are not only experts but also NPO activists and residents of the regions, and these nine NPO banks have lent about 1.6 to 1.7 billion yen (U.S.$ 15.2 to 16.2 million) in total to date. In addition, there have been almost no credit losses.

Another feature is that NPO banks try to build a relationship through which customers can see the borrowers. By actively disclosing information on the borrowers on the NPO banks' websites, it can be a PR activity for the borrowers, and the borrowers can be aware that customers are paying attention to them. Some NPO banks regularly call or visit offices to check business progress, or request support from related organizations if needed. However, as one of the NPO banks, AP Bank has borrowers all over Japan and it is difficult to build such relationships, they ask borrowers to run a booth at outdoor events hosted by the bank.

Connect Thoughts between Investors and Borrowers

Targets for momo finance loans are Aichi, Gifu and Mie Prefectures: they lend money, up to three million yen, to NPOs or businesses that work to solving local issues. Although they invite capital investors nationwide, about half of the investors are from Aichi Prefecture, and others are investors who want to support hometown activities. For example, some are from Nagoya City (Aichi Prefecture) but live in Tokyo, while others are from Gifu Prefecture but live in Nagoya City. We have received investments of 19.72 million yen from 178 people, as of February 2008.

One of our previous loan customers is an NPO that promoted green tourism by carrying on the traditional lifestyle in Gujo City, which is located in the center of Gifu Prefecture. Young people who frequently visited Gujo when they were students and fell in love the area established the NPO, and we decided to lend money to establish a base for local revitalization and employment for young people in order to provide an area where a younger generation can settle in.

As many capital investors want to support agriculture, some investors decided to ask momo for money. To provide money to people trying to grow fresh vegetables without agrichemicals or chemical fertilizer in Gifu Prefecture and its surroundings, we decided to lend money to create an opportunity for urban consumers to experience farming, and to create a relationship that depends not only on money.

Thus, systems, businesses, and finance are valued, as well as capital investors' opinions for screening of loan customers. When I worked at a bank, I did not imagine depositors' faces; however, to form connections between investors and areas through money is the aim of momo. Investors who sympathize with the activities of loan customers can offer to donate refundable interests, or give advice on business plans. To place a great deal of importance on such relationship, thorough information disclosure is needed. We therefore issue news letters to the members in addition to the website, or organize "momo bar" or "momo cafe" events for capital investors to interact.

Towards Creation of Sustainable Community

People might believe that the financial conditions of Aichi Prefecture are good because of the castle town of Toyota. However because resources of this area easily flow out as a result of developed road infrastructure, the area is not necessarily invigorated. People, goods and money need to flow within an area for revitalization. I expect that through the activities of momo, for example, by showing sample cases that bring money back to rural areas and remind residents of an era when communities and money were always united, such as early tanomoshiko, in which individuals and companies paid money to each other and provided loans.

In order to revitalize such movements, it may be better to expand structures such as momo. What is required for banking facilities is not a larger scale, but whether they have capacity to make areas vigorous. I would like to help community-based activities to encourage healthy lifestyles in this city where I was born and raised.

Masaki Kimura is a representative director of the community youth bank momo.
After graduating from college, he worked for a bank, and became executive director of A SEED JAPAN in 2003. He expanded activities on the theme of nonprofit management, Social Responsibility Investment, and Corporate Social Responsibility. In 2005, he established the community youth bank momo and became its representative director. After moving to Nagoya City, he began working on the realization of local production and local consumption of money by young people. In addition, he was a staff member of the management office of AP Bank in fiscal 2005.

TAG Sustainability College