use case

A worker-owned cooperative banking system

This case presents an approach for cooperatives to manage financial resources. In this case, the bank is owned and managed by workers of Costa Rica. In the global financial system, often underpinned by large capital-rich establishments, BPDC provides an alternative by shifting power to the diverse working class.

source of visual

Latin America, Costa Rica, Offline
- Where did this use case occur?
Late 1960s - ongoing
- When did this use case occur?
Government of Costa Rica
- Who were some of the key collaborators
All workers who abide by the conditions of the organization are participants in the process. Over the years, millions of people have banked with the institute.
- How many people participated?
Currency / Trade, Nation/Country, Public
- What are some keywords?

What was the problem?

Private financial institutions occupy a central position within most economies. Individuals engaging with these institutions are treated as clients and the overall strategy of these institutions is to maximize profits of the institutions and promote shareholder wealth. This creates a power imbalance and differing priorities between the individuals and the owners and/or shareholders, given varied interests.

How does the community approach the problem?

The Costa Rican government established the bank to promote economic development and solidarity.

Process

Cooperative Management

Technique

The country’s workers own the bank through their contribution to the capitalisation for the bank which is designed through employer's contribution of 0.5% of monthly wages and employees' contribution of 1% of their wages. After a year, 1.25% of contributions are transferred to the employee’s pension funds, while the remainder is used for permanent capitalisation of the bank, which in turn provides both stability and a public nature to BPDC. The bank also espouses values enforced across all levels of management and operations such as accountability, transparency, respect etc. The bank’s primary governance structure is a Workers’ Assembly, which represents the worker members, about 20% of the population. The Assembly is responsible for dictating the institution’s strategic direction and possesses consultative and decision-making power. The Workers’ Assembly is formed of 290 elected members, representing all of the country’s social sectors. The Assembly also includes a Permanent Women’s Commission that makes gender equality a priority with at least 50% of the bank’s board expected to be women.

Tool

No Specified Tools

What were the results?

• The bank represents an alternative to mainstream banking. It is a hybrid, owned by the workers of Costa Rica and with links to the public sector, rather than being a private financial firm.
• BPDC is the third largest financial institution in the country, accepting over 40% of the country’s payroll contributions. (2017 statistics)
• BPDC has also increased trust in a nationalised banking system.
• The bank has the distinction of being the first public organisation in Central America to establish a gender ratio of at least 1:1 in its decision-making bodies.

In Our Opinions

How participatory was it?

Empower

Significantly changed the power relations for the working class, giving them ownership over a financial institution, while at the same time receiving security.

What makes this Use Case unique?