Poor could gain from financial crisis: Nobel winner

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San Jose, Calif, November 14:: The global financial crisis can become an opportunity to help the world's worst off, says the Nobel Peace Prize laureate known as the ‘banker to the poor’.

World leaders could encourage new types of lending that would let the poor take themselves out of poverty without the risks of the traditional system that has just failed, said Professor Muhammad Yunus.

Yunus was awarded the Nobel in 2006 along with ‘micro credit’ bank Grameen Bank, which he founded in his native Bangladesh in 1983.

The bank has lent more than $7 billion, in tiny increments of a few dollars to a few thousand at a time, to millions of poor borrowers -- almost all women -- to run small businesses. Seamstresses would be lent money to buy a sewing machine or cloth, for example.

"This is the disaster of a lifetime, and disasters are very painful, but it's also an opportunity," Yunus said in an interview with Reuters on Wednesday. "There's lots of thing you don't do in a normal period, you keep on piling up problems. Now you can address it fundamentally."

The crisis, he said, was created by a handful of people driven by ‘extreme greed’, but ‘it's the poor people, the bottom half, 3 billion people, who'll be hit the hardest through no fault of their own.’

Although an eager capitalist, Yunus has long warned about the excesses of globalisation and free markets unchecked by regulation. The recent meltdown of markets around the globe has only reinforced his belief that the world needs a regulatory structure, like a world central bank, to referee a financial system that is inextricably linked.

NEW STANDARDS

He also argued for new accounting and legal standards that would allow for a second separate industry, so-called ‘social businesses’ such as Yunus' own Grameen Bank, to emerge.

Yunus said President-elect Barack Obama is in a unique position to ‘create his own history’ and rebuild the financial system in such a way that an entirely new class of companies, driven by both profit motive and a desire to improve society, can be launched.

Yunus was in Silicon Valley to receive the James C. Morgan Global Humanitarian Award as part of the Tech Awards. The award's past recipients include Microsoft Corp co-founder Bill Gates and Intel Corp co-founder Gordon Moore.