27 Oct Nobel Laureate Muhammad Yunus on Law and Microfinance
Last weekend I had the great privilege to meet Nobel Peace Prize Laureate Muhammad Yunus. His speech (which you can watch here) was one of the most inspirational messages I have heard in years. He received several standing ovations and many in the audience were moved to tears.
I brought my children to the speech and explained to them exactly what Yunus was doing with microfinance. Their response was, “That’s a simple idea. Lending someone just enough money to own their own sewing machine and then they pay the money back? Why didn’t someone think of that before?”
I encourage you to spend an hour and take in Yunus’ amazing message about the role of microfinance in helping alleviate world poverty.
One of the more interesting things he had to say was about the relationship between law and microfinance. When Yunus was asked how law is developing to further his work and help microfinance, here was his response (at 1:08th minute):
When we were creating Grameen Bank [in Bangladesh] … we were insisting that we be created under a separate law, that we should not be asked to create ourselves under existing banking law. Finally we succeeded and we have a separate law for ourselves and that’s how we can work the way we do.
Everywhere we have the problem of the banking law…. Recently … I was meeting with the Chairman of the Federal Reserve [Ben Bernanke] and he asked me “How I can help to bring Grameen Bank programs to come to the United States?” I said, “Well, you have to change the law. Or create a new law.”
Existing law as it is everywhere around the world is an architecture. Law is basically an architecture of society. … It creates a society…. The present architecture for banking is [the] architecture for a supertanker. It’s a huge, big ship which goes into the deep ocean carrying lots of cargo. But when we talk about microcredit we are talking about a dingy boat, which goes into the shallow water. We cannot create a dingy boat with the architecture of a supertanker. If you do that it will sink. It cannot function. So we need the architecture of a dingy boat. Then we can create and reach out to the families in every place. Because it’s a supertanker it cannot go to the small people, because it’s shallow water…. So that’s one basic thing in legal reform we have to do … create a banking system which is inclusive, which includes everybody, nobody is denied. Not even the beggars, not even the homeless persons are excluded.
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