Co-operation must be at the centre of financial reform

Global financial reform is needed, with co-operation at its heart, according to Monique Leroux, Chief Executive of Desjardins.

At a breakfast conference organised by the European Association of Co-operative Banks, Ms Leroux outlined the need for education, a plural economy and co-operation in financial reform.

Desjardins is the largest financial group in Canada with nearly six million me members and clients.

On the morning of the launch of the International Year of Co-operatives by the United Nations, Ms Leroux told delegates: "When I speak of the need for education, I mean the education of our members and people in general.

"We are currently running a great risk as people are becoming increasingly disconnected from major economic and financial issues, which are often matters beyond the grasp of anyone who is not a specialist.

"The financial intermediation sector, for example, is well-known for the complexity of its products, for its highly specific expertise, and for its innovative and sophisticated technologies, but it remains far from people's everyday lives."

Ms Leroux suggested that people need to understand systems better, and that most recently the people of Greece have been wondering what has hit them in terms of the global financial crisis. She said: "They must avoid the pitfalls of debt in societies where there is an overabundance of credit. They must rediscover the meaning of savings. In short, they must take control, individually and collectively.

"co-operation is not there to teach people a lesson. But the great quality of the co-operative model is that it brings people — everyday men and women, in the sectors of agri-food, finance, health, and all others — to get involved locally in their caisse, in their working co-operative, and inevitably to become interested in economic issues."

On a plural economy, Ms Leroux said "a healthy balance between the capitalist market economy and the more social economy, including the world of co-operatives and mutuals" is needed. "It is in this pluralist economy that we will find a valuable connection between institutions and people," she said.

"The current experience of a Europe weakened because of sovereign debt, and the inability of the United States to support real economic recovery demonstrates the need to move towards a more co-operative form of governance. With no change of direction in this regard, the current economic and financial problems will worsen.

"The major players such as governments, central banks, companies, representatives of civil society, and political parties must be able to work together."

Ms Leroux added that co-operatives must be a part of the solution. Three decades ago the co-operative and mutual model was seen as outdated, according to Ms Leroux: "It appeared all too often as incongruous with globalisation efforts aimed at standardizing the rules. In fact, very often, globalisation recognized only the dominant model of capitalism. Here I am referring to accounting rules and regulatory frameworks.

"Co-operatives, and especially financial co-operatives, could not easily access capital to keep up in the business arena, in the same way they could not offer fashionable incentives to attract the best managers."

Although, since 2008, Ms Leroux believes the landscape has changed: "The financial crisis marked the end of the two-lane highway open only to private companies and governments. A third lane has opened up for us, and we must now accelerate our growth and encourage the development of new co-operatives.

"In many contexts, I think it would be desirable to return to more local solutions. Co-operatives are businesses on a human scale. They are close to communities and controlled by them. They encourage personal commitment. They encourage people to get into action alongside each other, rather than waiting for governments or the international community to act."

During the International Year, Desjardins will be hosting the International Summit in Québec from 8–11 October. The event focuses on 'The Amazing Power of Co-operatives' as the theme for the global meeting.

Said Ms Leroux: "I think it's time to demonstrate this amazing power to the rest of the world. Co-operation is a concrete solution to the major economic, social, and environmental challenges of our time.

"In the current context of worldwide market volatility and economic uncertainty, co-operation is, in my opinion, the business model that is likely to see the fastest growth by 2020 to 2030.

"I think it is time to become aware of this ourselves, and to educate other economic and political players to the fact that the co-operative movement is not only a local or rural model, but a global business model suitable for many financial and industrial sectors, and for offering a host of services to communities."

The programme for the International Summit, which will feature roundtable discussions and research projects from organisations such as McKinsey & Company and Deloitte, was also unveiled during the launch of the International Year.

In summing up her address, to the EACB session, Ms Leroux emphasised the importance for governments to adopt laws and regulations that enable co-operatives to be created and to thrive. "This is not to give ourselves advantages over other institutions, but to recognise this alternative, this third lane to be occupied by the co-operative model."