The war on inflation has not yet been won, but central bankers are winning. And the negative impact has not translated into lower economic growth or recession.
In the past 15 years, global peacefulness has fallen by more than 3%. Old and new conflicts, the pandemic and our political and cultural polarization are the main culprits.
Global Finance editor Andrea Fiano interviews Ásgeir Jónsson, Central Bank Governor of Iceland during Global Finance's World's Best Bank Awards at the National Press Club in Washington, DC on October 15th.
The Microcredit loan mechanism works by providing very small loans that are repayable in weekly installments spread over a year. Eligibility for a subsequent loan is dependent upon repayment of the first loan. Bank branches are set up with a branch manager and a number of borrower-group managers to handle about 15 to 22 villages. Groups of five prospective borrowers are formed, and of those five, two receive loans in the first stage.
After six weeks, assuming those two begin repayment—and they will be under considerable group pressure to do so—other group members also become eligible for loans. Thus collective responsibility serves as collateral on the loan. Credit is supervised closely both by the groups of borrowers formed by the bank, and by bank staff. There is a stress on credit discipline and collective borrower responsibility, and in addition the bank focuses on saving, with both compulsory and voluntary savings programs.
Interest on all loans is set at 16% and the repayment rate is above 95%.