In June 2014 the European Central Bank dropped its base interest rate below 0% for the first time. It charges “negative interest” on overnight deposits of commercial banks and is not the first or only bank to do this. With this policy central banks hope to stimulate commercial banks to make loans into the real economy instead of depositing excess money with the central bank. As a result the inter-bank interest rates also fell below zero and some banks introduced fees on deposits in current accounts of large customers.

Model of a sustainable money system beyond the growth imperative? The Swedish JAK Bank has been offering interest-free savings, loans and banking services since 1965, with the aim of enabling an interest-free economy. More than 38,000 members of the cooperative bank save with interest-free savings accounts and can thus borrow money from the general fund for the cost of the administration fees only. The principle is simple: when savers forego income from interest, they also do not need to pay interest when they take a loan. Savings and loans are directly connected in the JAK system through this principle and the bank also encourages its members to have an active dialogue about this. The exponential effects of compound interest that are seen by many monetary critics as one of the most significant systemic causes of the redistribution of wealth and of the pressure for economic growth are circumvented by the JAK bank in a unique way. Their secret recipe: in place of interest there is the principle of complementary ‘savings points’, one of the JAK bank’s ingenious and highly developed processes of liquidity and time planning.


The savings and loans model of the JAK Members’ Bank: savings, loans, amortizing – all without interest.

The first concrete steps towards creating the JAK bank model were taken in the middle of the Great Depression of the 1930s. The bank finally established itself in 1970 and has continued to this day. In the meantime, it has been imitated in Finland, Italy and Spain. Also in Germany, where the roots of this idea can be traced back to the „Ausgleichskassen” (equalizing funds) during the Weimar Republic, there are new initiatives in Stuttgart and Freiburg. However, the JAK bank model is hardly known outside Sweden. Because the giving and taking of interest is forbidden in Islam, the JAK model in Sweden is apparently used by believing Muslims, who see that it offers them the opportunity to take part in the modern money system in a way that is compatible with their beliefs.

Further Information:

Ana Carrie (2001): How interest-free banking works – The case of JAK. In: FEASTA REVIEW Number 2, S. 149-154. Download: (247 KB)

Mark Anielski (2004): The JAK Members Bank Sweden An Assessment of Sweden’s No-Interest Bank. Download:

JAK Boken /JAK Book (2009, Swedish, English, Italian):




JAK like models in Germany:

OZB Stuttgart Homepage:

JAK like models in other countries:

JAK Denmark (JAK Danmark):


JAK Finland:

JAK Italy (Associazione Culturale Jak Bank Italia):



JAK Spain (JAK España):

The idea of constructing a monetary system without (positive) interest rates can be traced to the German-Argentine businessman Silvio Gesell and the French economist Maurice Allais. Gesell observed the booms and busts of the economy in which he was doing business and developed the idea that fluctuating currency circulation leads to oscillating economic activity. When money circulates faster, a boom or inflation sets in; when it slows down, then there is less turnover and investment. The results are economic crises and deflation. Gesell saw as a central cause the fact that one can withdraw money from economic circulation: physically in that it disappears under the proverbial pillow; or in a more modern sense it gets swallowed up by the speculative financial markets that have very little to do with the real economy. In both cases it is not directly available for the purchase of produced goods, which with time wear out, rust or rot, or in other words lose their value, whilst money initially holds its value. Instead of rewarding the possessors of money with high interest payments for their “sacrifice of non-consumption”, he proposed the opposite: that they should pay a fee for keeping their money out of circulation in the economy. The term ‘demurrage’ is still used in the shipping industry: when the agreed period of time for loading or unloading a freight ship is overrun, then ‘demurrage’ or ‘storage money’ is due. Gesell wanted to apply the same principle to cash. In order to avoid the “costs of money hoarding”, the owner of money would make his liquidity available, even at an interest rate of 0%. So the theory goes. Because this money would mostly be lent out interest-free, he called his money concept “Freigeld” (German for “free money”). While Gesell’s reform proposal is mostly unknown to outsiders and highly controversial among economists, in practice, there is increasing acknowledgement of its value. Central banks and commercial banks in several countries have added this financial instrument to their toolkit and have begun to charge negative interest or ‘asset fees’ on current accounts. They thus hope to avoid deflationary economic crises without fuelling inflationary risks through increasing the money supply. Up to now, the ‘free money’ idea has only been tried in local ’emergency currencies’ and ‘parallel currencies’. This was how the mayor of the small town of Wörgl in Tirol, Austria issued ‘work vouchers’, on which a monthly ‘hoarding fee’ was payable, during the international Great Depression in 1932. This system led the community out of the worst of the crisis until it was outlawed by the central bank a year later. In 1930s USA, hundreds of ’emergency currencies’ were emitted, some of them with exorbitant circulation fees. Many modern regional currencies, the best example being the ‘Chiemgauer’ in Bavaria, also charge a ‘hoarding fee’ in order to increase local money circulation and stimulate the local economy. This idea is also used in commercial circles: purchased credits with the online telephony provider Skype (TM) disappear if they are not used within a certain period. There is a similar model in the history of coins; ‘bracteates’ were thin metal coins that were valid in certain regions and were regularly recalled. During the compulsory exchange of old for new coins, a fee was charged, which was meant as a tax but also led to a different relationship to money. Instead of hoarding the coins, which would become worthless on a certain day, people preferred to pass the money on today rather than tomorrow thus perpetuating the circulation of currency. This principle can still be found today with vouchers, prepaid cards or companies offering time-limited accounts. Lufthansa airline’s customer loyalty program is designed so that ‘air miles’ normally disappear after 36 months if not used, in order to prevent, amongst other things, Lufthansa going bankrupt because of its loyalty program, which would happen with a successful loyalty scheme if for example all customers were to redeem their points at the same time.

Islamic Banking describes banking business according to Islamic, Sharia principles. Peculiarities of banking based on the Koran include not only a ban on charging interest but also the avoidance of speculative business and unethical investments of clients’ money such as in alcohol, tobacco and pornography. Islamic Banking thus includes on the one hand the issuance of interest-free credit and on the other hand the pursuit of investment and finance products that indeed bring a profit but do not promise any risk-free interest on the investment. Extended credit is also not available if a bank has to add interest charges on top. In order to get around this, Islamic Banks first of all acquire financeable objects like houses themselves and then sell them on in exchange for a markup on the profit. In Great Britain, the Islamic Bank of Britain was the first bank based on Islamic principles to open its doors in September 2004 (Study by Mark Anielski, PDF). In 2012, the first Sharia-based finance products were offered by an asset manager in Germany (Report on German radio). The first Sharia-based bank to receive a banking licence for the German market from the German finance ministry in March 2015 was the Kuveyt Türk Bank AG, according to media reports such as in the ZEIT.