CHURCH-sponsored credit unions that lend money at low rates of interest were first developed in Italy in the 15th century

Known as Monte di Pietà, the credit unions provided deprived citizens with an alternative to the inflated interest rates charged by the Lombards and the Jewish money-lenders.

The first community credit union was established in Perugia in 1461. The Sienese version known as the Monte dei Paschi di Siena, which still exists, was founded in 1472, and is said to be the oldest bank in Europe. By the end of the 15th century, there were 80 Monte di Pietàs throughout Italy.

The Roman Catholic Church had proscribed the payment of interest on loans; but the Franciscans, who encouraged the movement, took a severely practical attitude, and charged interest at six to eight per cent, arguing that credit unions that had no income would not be viable.

The movement quickly went north to the Spanish Netherlands, where lotteries provided the capital for credit unions. Starting in Bruges in 1573, the concept spread rapidly, and was so successful that the church-sponsored credit union supplanted the usual loan sharks.