According to rumors, Pope Francis could give a speech at Wall Street during his next New York trip in September 2015. If these gossips are confirmed, this intervention would be a meaningful symbol for religious and financial communities from around the world. It would be almost two years after the Pope's exhortation ”to generous solidarity and to the return of economics and finance to an ethical approach which favors human beings"1 and would provide an opportunity to promote "Catholic finance".
The development of religious ethical finance has experienced a significant acceleration in the last decade. However, in comparison to Islamic finance, which has grown strongly and now represents over EUR 2,000 billion of assets, Christian finances, in particular Catholic finance, remain more or less embryonic. In France, although the social finance market has seen a continuous growth for several years, the sector of ethical finance is essentially atheist (not religious).
The lateness of the Catholic finance results, in a large part, from the reluctance of religious institutions to endorse the concept of "Catholic finance". The "Catholic finance" expression remains a controversial question and sometimes taboo. The main reason comes from the historical unease of the Roman Catholic Church on issues related to money2 and communitarianism3. However, due to the development of the Catholic financial activities, the current situation calls for a clear position from the Holy See.
In recent years, the French controversy over the concept of "Catholic finance" has been crystallized in particular following the release in July 2013 of the book "Catholic finance" (“Finance Catholique”) which revealed a fault line between supporters and opponents to the concept (I). However, in the meantime, the Catholic finance has continued to develop its activities. To best illustrate the dynamism of this market niche, we will set out several recent developments (II).
I / The controversy relating to the terms "Catholic finance"
In July 2013, was published a remarkable book by its title and purpose4. It was the first of its kind to be entitled "Catholic finance" and had the purpose of proving the existence of "Catholic finance". The author, a lawyer, brought, in support of this thesis, the names of several banks, investment funds, financial products and para-financial services, which claim ostensibly to be Catholic, or who proved, after analysis, to be compatible with the values and precepts of the Catholic religion ("Catho-compatible finance").
Following this publication, several commentators pronounced themselves against the validity of the thesis. Mr. Greiner, journalist at “La Croix”, doubted it would be appropriate for the magisterium of the Church to engage in a normative way for the allocation of a "label of catholicity to financial actors"5. The Community of St. Martin objected, for its part, that the concept of "Catholic finance" for convenient it seems, is nevertheless "inadequate to describe what the Catholic Church intends to promote as type of finance. Why? Because the criteria put forward by the Catholic Church with regard to the financial world are not religious but ethical. The Catholic Church, when it engages for a finance centered in human, do it as expert in humanity, as Pope Paul VI said: the goal of the Catholic Church is therefore not to establish a “Catholic finance” but to promote everything that can contribute to reconcile financial and human dignity, beyond sectarian differences."6 Finally, Mr. de Lauzun, who was awarded in January 2015 by the Foundation “Centesimus Annus – Pro Pontifice” for the International prize for economics and social studies, and the Justice and Peace Commissions have never acknowledged the accuracy of the terms "Catholic finance nor even used it.
In the contrary, the controversial book sparked positive and enthusiastic reactions. Since an "Islamic finance" is officially recognized and supported by the French government, why should we be reluctant to a "Catholic finance"? Some regarded the thesis as "the first step of awareness." Mr. Boudet, professor in public law, conceded in a note of several pages to be favorable to the concept of "Christian Finances" in plural, and added that, despite many critics, the book was a "capital work that goes beyond the traditional theological thinking by defining what the catholic finance is throughout history, economics, law and Catholic dogma." For his part, Mr. Lieven, a journalist at La Croix, devoted the terms "Catholic finance" half by using the expression with quotes placed on "Catholic" only. But the most solemn contribution came from the former president of the Vatican bank (IOR), Mr. von Freyberg ventured to use the terms in one piece, on July 8th 2014, for the appointment of Mr. de Franssu to succeed him, declaring "Through this work we have lad the ground for a new team to make the IOR a truly outstanding service provider in Catholic finance”.
Whatever the outcome of this semantic controversy will be, several concrete activities have meanwhile significantly emerged, in the Christian finance area, and more particularly, in Catholic finance, that certify without reservations their vitality throughout the world.
II / Illustration of Catholic finance's dynamism
As regard to the first Catholic bank in the world, the Vatican bank (IOR), it is clear that unprecedented reforms have been implemented since summer 2013, through getting a website to publish its financial results. And developments will not rest: in July 2014, the IOR disclosed the second phase of reforms, some 19,000 bank accounts having been cleaned. In the next three years, the organization of the IOR should be modified and its activities should be redefined following three priorities:
- strengthening the business model;
- transferring financial assets towards an asset management company specially created for this purpose and called “Vatican Asset Management”;
- focusing the activities on financial advice and payment services for the clergy, congregations, dioceses and lay employees of the Vatican.
In addition, on May 2014, Father Pascal-André Dumont launched the Luxembourgian fund “Conventum-Proclero” to reach European investors by replicating the brother fund launched in France in July 2012 and managed by Meeschaert Asset Management7.
The Oddo bank had, also created in 2012 a Catholic fund called "Oddo Partage", where each holder undertakes to pay annually a portion of its revenues, representing circa 1% of the net asset value of each share, to a philanthropic foundation.
While in the sector of crowd funding, the USA market had, since many years, already several websites8, started in France the first platform, named "CredoFunding" just in November 2014. It aims to provide financial support exclusively, to the projects of the Christian community compatible with Christian faith and morality. CredoFunding intervenes for donations but also loans with or without interest. The investments may cover the following areas:
- Education: Catholic school, catechesis, patronage, educational organizations, universities, scouting movements, nurseries;
- Religious living and Christian heritage: restoration of churches, parish associations, building monasteries and abbeys, diocesan sites, religious communities;
- Solidarity and projects: humanitarian, human dignity, education funding, social entrepreneurship, protection of life;
- Culture and art: books and publishing, movies, music, handicrafts, shows.
At the same time, the association based in Paris “OFCCFO” set up a label called "Excelsis" to award Christian compatible investment products and services9.
Another example could be Caritas France which published early 2015 its findings on the provision of microcredits to persons in financial distress. Since 2004, 2862 loans have been granted, 1879 of which were repaid. The risk is carried half by Caritas France and a bank, and is secured by a social fund guarantees. Until 2015, there have been 293 calls for guarantee, which represents nearly 10% of the number of loans. The majority of these loans were granted to women (1573) for an averaged amount of 1,922 euros10.
Last example but not least, in the Democratic Republic of Congo, the project was disclosed in September 2014 by the National Episcopal Conference of Congo to create a Christian banking institution, through a partnership with the telephone company Vodacom11.
All these illustrations are not exhaustive, but prove, once again, that a number of new banking and financial activities get involved in finance with a Catholic motivation or purpose. These activities are dynamic and innovative. They must not evade the activities of the Protestant Christian finance that are in many ways more numerous and uninhibited regarding money. To conclude, it should be noted that, to our knowledge, no Orthodox finance exists concretely so far. However, according to the Russian press, a group of businessmen have started to work in December 2014 as to the creation of an Orthodox bank and investment fund and Archpriest Vsevolod Chaplin has welcomed the project because it would rectify usurious mechanisms12.
Dr. Antoine Cuny de la Verryère
President of the association Christian Finance Observatory (OFCCFO)
1 « Evangelii gaudium, disclosed 24.11.2013 (§ 53-60 et 202-208).
2 Because one should “give back to Caesar what is Caesar's and to God what is God's".
3 François-Xavier CARAYON, La finance orthodoxe : réponse russe à la crise ?, 29/12/2014, http://www.liberation.fr/monde/2014/12/29/la-finance-orthodoxe-reponse-russe-a-la-crise_1171434.
4 A. Cuny de la Verryère, Finance Catholique, EMS, 2013.
5 D. Greiner, Regards chrétiens sur la finance (2), in La doctrine sociale sur le fil, http://doctrine-sociale.blogs.la-croix.com/regards-chretiens-sur-la-finance-2/2013/09/16.
6 Communauté Saint Martin web-site : http://www.communautesaintmartin.org.
8 For example: Faith Funder, Faith Launcher, 1and700, Christian-Crowdfunding, ou www.weraise.
11 La Banque catholique prend forme, 20/09/2014, http://www.business-et-finances.com/la-banque-catholique-prend-forme.
12 The idea of orthodox finance, although spiritual, also pursues a political ambition to build an independent Russian financial system from the Western world (Archpriest Vsevolod Chaplin: Orthodox banking rescue from crisis, 22/12/2014, http://ru-facts.com/news/view/42460.html).