trust

In a Financial Times article on the 15th of April, an interesting, albeit illegal, trust network was explained.

In short, what people in Iran have to do to move large sums of money in and out of the country in the face of an increasing economic clamp down from the US, is to make use of a centuries-old method known as havalah.

Many people are familiar with the story of the Grameen bank.  Its founder (Mohammad Yunus) recently won a Nobel Peace prize for his pionering work in micro-credit and poverty alleviation.  In essence, what he did was to set up a self-regulating lending system.  Before the Grameen bank came into being it was virtually impossible for a poor person in Bangladesh to obtain credit.  Because of extremely poor debt repayment rates, banks found that the cost of lending made it not worth their while to lend money to the poor.  This is largely due to their approach of designing increasingly complex credit scoring systems in order to decrease their risk.