We buy organic products, choose green electricity, and boycott companies whose political goals contradict our own values. We accept that this may cost more. We hope this is how we can influence the world in a direction we consider better.

And then there’s an industry that keeps producing new scandals: Cum-Ex, aiding tax evasion, worthless shipping funds, opaque products. An industry that has taken on a life of its own—like an accelerant that makes new bubbles form and burst faster and faster. The problem is that our growth-driven economic system depends on an endless supply of new credit.

As consumers, we depend on cashless payments—without them, we lose access to basic necessities like housing, work, and communication. We’ve gotten used to withdrawing cash for free almost anywhere, getting free credit cards, and paying nothing for a checking account. Some banks even pay you to open an account. We feel courted—and assume banks must be doing great business with our accounts. We assume they “speculate” with our checking balances (more accurately: demand deposits / sight deposits) and therefore must be making enormous profits that fund all these “free” services. But all of these services obviously cost money.

That’s not actually true. In reality, “free” checking accounts are often a loss for banks. Banks can only invest a small portion of the money sitting in checking accounts—but more on that later. Still, the free account is the gateway drug: it’s meant to get us to do more business with the bank where the bank can earn money, such as loans and credit-card turnover, long-term investments, or a securities account.

How Money Works

Money acts like an advance of trust when it flows into a project as a loan or investment. It enables something to be realized and gives it a chance.

That makes credit and investment powerful tools for changing the world. They decide success or failure.

In traditional banking, a bank can essentially only invest and lend money with maturities that match the time horizons on which other customers can demand their money back. That’s why demand deposits aren’t particularly well-suited for lending. Some theories (e.g. the “core deposits” concept) justify deviating from this to a degree, but that’s not the topic here.

On top of that, regulations—such as capital requirements—limit the amount of credit a bank can extend.

So a bank can only provide long-term loans when customers invest money long-term and sufficient equity capital is available.

Why I’m with GLS Bank

We rarely ask what this—our—money actually does in the world when it flows into investments and loans. It almost certainly also finances companies, parties, and organizations whose actions would repel us if we looked closely.

It turns out that money can have a huge impact in changing society for the better. We want it to be used in ways that match our values—so that companies and projects that create deeper meaning receive that advance of trust.

Unfortunately, it’s often hard for these projects and companies to obtain that kind of trust—and the financing that comes with it.

For about two years now, I’ve been a customer and cooperative member of GLS Bank, because it mattered to me that I wouldn’t be advocating for environmental protection, organic agriculture, fair trade, social security, the protection of refugees, and world peace on the one hand—while my money works against those very interests on the other, simply because my bank invests solely for maximum return.

GLS Bank keeps surprising me in a positive way. I’ve come to see that it doesn’t treat “fair banking” (as reviewed by fairfinanceguide.de) as a marketing tool, but actually lives those values.

As a cooperative bank, it belongs to its members and is run democratically. It’s a bank that doesn’t take money from Nazis and that takes a stand with #wirsindmehr.

A bank that stands with tenants in the fight against the world’s real-estate moguls.

A bank that publicly supports people who are fleeing war and hardship (GLS refugee aid).

A bank that is transparent about who gets financed (page 22) and that doesn’t speculate on financial markets.

For money to create real value and meaning, you need to understand when it can be invested long-term.

That doesn’t mean you must act altruistically. Of course, donated money has the longest-lasting effect because it never needs to be repaid—and GLS Bank even offers a way to finance donations. But, for example, buying cooperative shares also creates significant impact: increasing the bank’s equity directly increases the amount of credit it can extend, and members receive an annual dividend.

Given how much good my money can do this way, I’m happy to pay a small fee for my checking account. If this has made you curious about GLS Bank, I recommend listening to the first episode of the GLS podcast, “Who is GLS Bank?”.