Banco Palmas

Community Development Bank

Pioneering community bank of Brazil's solidarity economy since 1998. Interest-free lending in the Palma social currency. Model replicated to 152 community banks across 16 states.

Type	Community Development Bank
Region	Brazil
Status	Active
Links	Website

M69 Score

M69 Alignment2.4

Minimally aligned

1.02.03.04.05.0

Monetary Sovereignty2.0

Issuance (3x) + Stability (2x) + Fiat Indep. (2x)

Civilizational Durability2.2

Sovereignty + Governance + Resilience

Universal Adoption3.6

Traction (2x) + Inclusivity

Iss Mod3x

2.2

Stability2x

2.3

Fia Ind & Int2x

1.5

Traction2x

3.5

Sovereignty

1.5

Governance

2.4

Resilience

2.8

Inclusivity

3.8

Scored against the Money2069 Manifesto — see methodology. Higher = more aligned.

Key Findings

Strongest categories: Inclusivity (3.8) and Traction (3.5)Banco Palmas is a genuine force for financial inclusion, designed from the ground up to serve Brazil's poorest communities with zero-cost entry, no documentation requirements, and community-based trust. Its 27-year track record, 182-bank network, extensive academic recognition, and active founder leadership represent exceptional real-world traction for a community currency.

Weakest categories: Fiat Independence (1.5) and Sovereignty (1.5)The Palmas currency is structurally a fiat wrapper: pegged 1:1 to the Brazilian Real, backed 100% by Real reserves held in a traditional bank, with no sovereign unit of account and no path to fiat independence. The system is fully custodial, closed-source, censorship-capable, and operates entirely within a single nation-state's regulatory framework. These are not incidental gaps but fundamental design choices.

The fiat-peg paradoxThe 1:1 Real peg is simultaneously the project's greatest practical strength and its deepest M69 misalignment. The peg makes the currency immediately understandable, trustworthy, and usable by illiterate favela residents. But it means every Palma in circulation is just a Real with extra steps -- the community captures local circulation benefits but gains zero monetary sovereignty.

Governance is better than most community projects (2.4)The participatory forums (Local Economic Forum, Management Council, Block Councils) open to all residents represent a genuinely democratic governance model, scoring meaningfully higher than typical centralized community currencies. However, the lack of formal protections for monetary policy, the absence of separation between monetary and operational governance, and the institutional concentration in Instituto Palmas limit the score.

Remarkable replication successThe expansion from a single neighborhood bank in 1998 to 182 community banks across Brazil represents one of the most successful community currency replications in history. The e-Dinheiro platform enabling digital operation across the network is a significant technological evolution. However, replication does not equal sovereignty -- all 182 banks replicate the same fiat-dependent model.

The big takeawayBanco Palmas is an exemplary model of community-driven financial inclusion and solidarity economy, but it is fundamentally a local fiat-circulation tool, not an independent monetary system. Its M69 score of 2.4 reflects this tension: extraordinary social impact and adoption (Universal Adoption pillar: 3.6) paired with minimal monetary sovereignty (Monetary Sovereignty pillar: 2.0). For M69 alignment, Banco Palmas would need to develop a sovereign unit of account, fiat-independent backing, open-source infrastructure, and non-custodial architecture -- changes that would require a fundamental redesign of its proven and beloved model.

Detailed Rating Breakdown

Framework v0.2-alpha · Rated 2026-04-10

Banco Palmas is Brazil's pioneering community development bank, founded in 1998 in Conjunto Palmeiras, a low-income neighborhood of 32,000 inhabitants on the outskirts of Fortaleza, Ceara. Created by the residents' association ASMOCONP under the leadership of Joaquim de Melo Neto Segundo (an Ashoka Fellow since 2004), the bank operates under the solidarity economy model. Its signature innovation is the Palmas social currency -- introduced in 2002 and pegged 1:1 to the Brazilian Real -- which circulates among approximately 240-270 local businesses with 5-15% discounts to encourage local spending. The model has been replicated across up to 182 community development banks in Brazil, and its e-Dinheiro digital platform has reached 20,000 digital accounts and moved nearly R$1 million in the local economy in 2025. From an M69 alignment perspective, Banco Palmas demonstrates exceptional strength in traction and inclusivity. The project has operated for 27 years, survived a Central Bank legal prosecution in 2005, expanded its model to over 100 community banks across Brazil, earned extensive academic and policy recognition, and serves populations deliberately excluded from formal banking. Its participatory governance through Local Economic Forums, Management Councils, and Block Councils is unusually democratic for a community finance project. The social currency model genuinely keeps wealth circulating within underserved communities. However, the project has fundamental structural weaknesses from an M69 perspective. The Palmas currency is hard-pegged 1:1 to the Brazilian Real and fully backed by Real reserves -- making it structurally fiat-dependent with no sovereign unit of account, no fiat independence, and no purchasing power protection beyond what the Real provides. Issuance is centralized through the community bank (not permissionless), and the system is fully custodial with no technological enforcement of monetary rules. The project operates entirely within Brazil's legal framework, has no open-source technology, no privacy protections, and no interoperability standards. While Banco Palmas is a remarkable social innovation and a genuine force for financial inclusion, its monetary architecture is fundamentally a fiat-wrapper model rather than an independent monetary system.

Issuance Model3x

2.2

Code	Question	Score
IM-01	Is issuance permissionless?Issuance is restricted to Banco Palmas and its network of community development banks. Only the bank can issue Palmas currency. Individuals obtain Palmas by exchanging Reals, receiving wages in Palmas, or through microcredit loans. The bank itself is managed by ASMOCONP with credit decisions made by a Credit Committee. This is a single-issuer community institution model. [1][2]	1
IM-02	Is new supply created through debt?Mixed model. The Palmas currency can be obtained via exchange (debt-free) or via microcredit loans (debt-based). Microcredit for consumption is issued in Palmas at 0% interest, while production credit in Reals carries 0.5-3.5% monthly interest. The microcredit component is a core feature, not marginal. Both debt-based and non-debt-based mechanisms coexist. [1][2]	3
IM-03	Is issuance tied to measurable real-world economic activity?Not algorithmically linked. Supply is determined by demand for currency exchange and microcredit approvals. There is no real-economy index, no oracle, and no algorithmic link. The Credit Committee makes discretionary decisions about microcredit. However, the 1:1 Real backing means supply is constrained by Real reserves held. [1][2]	1
IM-04	Does the issuance model have a supply cap or hard ceiling?Supply is constrained by the Real reserves held by the bank -- for each Palma in circulation, one Real is held in reserve. This creates a ceiling tied to reserves rather than economic activity. Supply cannot expand beyond available Real reserves, which is a form of external constraint, not elastic response to economic signals. [1][2]	2
IM-05	Can supply contract (burn/redemption) as well as expand?Users can exchange Palmas back to Reals at the bank at 1:1 parity at any time, which contracts the Palmas supply. This is user-initiated and permissionless. The contraction mechanism is functional and has been used throughout the system's history. [1][2]	4

Spending Power Stability2x

2.3

Code	Question	Score
SPS-01	What mechanism does the protocol use to target spending power stability?No explicit stability mechanism beyond the 1:1 peg to the Brazilian Real. Stability is entirely imported from the Real through the fixed exchange rate and full reserve backing. The protocol itself has no algorithmic targeting, no rebase, no independent adjustment mechanism. [1][2]	2
SPS-02	What benchmark is used to measure spending power?The benchmark is the Brazilian Real at 1:1 parity. The Real is a single fiat currency that has experienced moderate to high inflation historically (Brazil's inflation has ranged from 3-10% annually in recent decades). This delivers moderate stability but with meaningful inflation exposure. [1][2]	2
SPS-03	How transparent and verifiable is the stability measurement?The 1:1 peg is publicly documented and the exchange mechanism is straightforward. However, there is no on-chain oracle, no independent audit trail, and reserve verification depends on trust in the community bank. The stability "measurement" is simply the peg ratio, which is transparent in principle but not independently auditable. [1][2]	2
SPS-04	What is the protocol's historical deviation from its stability target?The 1:1 peg to the Real has been maintained since 2002 (23+ years). The bank guarantees conversion at par. No depegging events have been reported. Within its target (Real parity), the system has been stable. However, purchasing power has eroded with Brazilian inflation. [1][2]	4
SPS-05	Does the protocol distinguish between short-term volatility and long-term purchasing power drift?No distinction. The system inherits whatever stability or instability the Brazilian Real provides. Short-term volatility is low (fixed peg), but long-term purchasing power drift is entirely imported from Brazil's inflation. Neither is explicitly addressed as a design concern. [1]	2
SPS-06	Is the stability mechanism accessible globally?The system operates only in Conjunto Palmeiras (and the broader network of community banks operates only in Brazil). The stability mechanism (Real peg) is restricted to participants who can physically access community bank locations or have Brazilian banking infrastructure. Not globally accessible. [1][2]	1

Fiat Independence & Interoperability2x

1.5

Code	Question	Score
FI-01	What is the protocol's unit of account?Hard-pegged 1:1 to the Brazilian Real. One Palma equals one Real by definition. The unit of account is entirely borrowed from the fiat system. Prices in the Palmas currency are identical to Real prices. [1][2]	1
FI-02	What is the fiat composition of the protocol's collateral or reserves?100% fiat reserves. For each Palma in circulation, one Brazilian Real is held in a traditional bank account. The system is fully and explicitly fiat-backed. [1][2]	1
FI-03	Does the protocol depend on fiat banking infrastructure to function?The protocol cannot function without banking. Real reserves are held in traditional bank accounts (partnership with Caixa Economica Federal). The e-Dinheiro platform operates within the Central Bank's regulatory framework. Banking is essential, not optional. [1][2]	1
FI-04	Are the protocol's price feeds and oracles fiat-denominated?No formal price feeds or oracles exist. The system uses a fixed 1:1 peg to the Real, which means all pricing is inherently fiat-denominated. There is no independent price discovery mechanism. [1][2]	1
FI-05	What happens to the protocol if the primary fiat currency it references collapses or depegs?If the Brazilian Real collapses, the Palmas currency collapses with it since it is backed 1:1 by Real reserves. The system has no independence from Real systemic risk. A Real hyperinflation scenario would destroy the purchasing power of all Palmas holdings. [1]	1
FI-06	Does the project have a credible transition path from fiat-dominated adoption to fiat-independent operation?No transition path. The fiat peg is treated as a permanent feature, not a bootstrapping mechanism. The 1:1 Real backing is the core design principle. No documentation suggests any plan to move toward fiat independence. The pending Law 4476/2023 would further embed the system within the fiat regulatory framework. [1][2]	1
FI-07	Can local or sectoral currencies be denominated in or settle against this currency?The network of 182 community banks across Brazil each issue their own local social currencies (e.g., Palmas in Fortaleza, Mumbuca in Marica), all using the e-Dinheiro platform. Each local currency is independently pegged to the Real, not to each other. The currencies do not settle against a common base unit -- they all independently reference the Real. The architecture supports local expression but through parallel fiat pegs, not composability. [1][2]	3
FI-08	Does the protocol define open standards for interoperability with other monetary systems?The e-Dinheiro platform provides a shared infrastructure across community banks, and the Rede Brasileira de Bancos Comunitarios purchased the platform and its tools. However, this is a proprietary platform, not an open standard. No interoperability specification exists for exchange with non-community-bank monetary systems. Interoperability is limited to the internal network. [1][2]	2

Traction2x

3.5

Code	Question	Score
TR-01	Is the project still active?Fully active and operational. Banco Palmas reached 20,000 digital accounts in 2025 with the e-Dinheiro platform, which moved nearly R$1 million in the local economy. The network continues to expand with 182 community banks across Brazil. New legislation (Bill 4476/2023) is advancing to formally regulate social currencies. [1][2]	5
TR-02	How long has the project been in existence?Founded in 1998. 27 years of continuous operation. The social currency Palmas was introduced in 2002 (23 years). One of the longest-running community currency systems in Latin America. [1][2]	5
TR-03	How many active users does the project have?Banco Palmas itself has 20,000 digital accounts and 3,000+ registered businesses. The broader network of 182 community banks across Brazil serves additional users. The Conjunto Palmeiras neighborhood has 32,000 residents. Total network reach is likely in the tens of thousands across all community banks, but below 100K verified active users for the Palmas currency itself. [1][2]	2
TR-04	How many businesses or organizations accept the project's currency?240-270 businesses accept the Palmas currency in Conjunto Palmeiras, with 3,000+ registered on the e-Dinheiro platform. The broader community bank network involves additional merchants across 182 banks. Within the Palmas currency specifically, this falls in the 100-1,000 range; including the broader e-Dinheiro network, 1,000-10,000. [1][2]	3
TR-05	Is the currency used as a unit of account?Within Conjunto Palmeiras, the Palmas currency is used for pricing at local businesses that offer discounts for Palmas purchases. However, since the currency is pegged 1:1 to the Real, prices are effectively denominated in Reals -- one Palma IS one Real. The currency functions as a unit of account within the community but it is identical to the fiat unit. Outside the community, fiat denomination dominates entirely. [1][2]	3
TR-06	Is the founder or core team still actively working on the project?Joaquim de Melo Neto Segundo, the founder, remains president of Instituto Palmas and is dedicated full-time to the project. Strong continuity of leadership since 1998. The project has active staff and community agents, though much of the operational staff is volunteer. [1][2]	5
TR-07	What partner organizations or institutions support or integrate the project?Extensive partnerships: Caixa Economica Federal (banking correspondent), BNDES (development finance), SENAES/Ministry of Labor (government solidarity economy secretariat), Ashoka, STRO (technical support for currency design), Cearah Periferia (founding NGO), Central Bank of Brazil (recognition and regulatory engagement), multiple universities and research institutions. Well over 10 independent partners across multiple sectors. [1][2][3]	5
TR-08	Is the project covered or recognized by credible external sources?Extensively covered. Peer-reviewed academic research in RAUSP, International Journal of Community Currency Research, Springer, SAGE journals. Featured by Accion, Center for Financial Inclusion, Ashoka, FAPESP. Cited in Brazilian policy discussions (SENAES). International media coverage (Shareable, Local Futures, Atlas of the Future). Referenced in British Museum collections. [1][2][3]	5
TR-09	Is adoption organic — not dependent on subsidies, incentives, or mandates?Primarily organic but with meaningful incentives. The 5-15% discount for purchases in Palmas currency is a material incentive. Interest-free consumption microcredit in Palmas (vs. interest-bearing Real credit) is also an incentive. However, the core adoption is driven by community solidarity and genuine utility. Retention is strong without subsidies. No government mandate. [1][2]	3
TR-10	What is the growth trend over the past 12 months?The project shows moderate growth. The e-Dinheiro platform reached 20,000 accounts, moved R$1 million in 2025. The community bank network has expanded to 182 banks. Law 4476/2023 represents advancing regulatory recognition. SENAES re-creation in 2023 provides government support. Growth indicators are up, though the core Conjunto Palmeiras operation is mature. [1][2]	4
TR-11	Does the project have a coherent narrative and cultural identity that drives long-term commitment?Strong founding narrative rooted in solidarity economy, community self-determination, and anti-poverty mission. The project emerged from a displaced community's struggle for economic dignity. "Economia solidaria" provides a powerful ideological framework. The community bank model is deeply embedded in neighborhood identity. The name "Banco Palmas" (palm trees, referencing Conjunto Palmeiras) connects to place-based identity. Cultural commitment is genuine and deeply held. [1][2][3]	4

Sovereignty

1.5

Code	Question	Score
SO-01	Can any single entity shut down the project?The Brazilian government or Central Bank could shut down Banco Palmas. The 2005 legal prosecution demonstrated this risk, though the bank prevailed. The project operates under OSCIP legal status and depends on regulatory permission. The Central Bank has regulatory authority over payment arrangements. Caixa Economica Federal holds the Real reserves. Multiple single-entity shutdown vectors exist. [1][2]	2
SO-02	Is the project's core infrastructure permissionless and self-hostable?The e-Dinheiro platform is proprietary, developed internally by Instituto Palmas. No open-source code is available. The platform cannot be self-hosted by independent parties. The network purchased the platform from its developers. No public protocol specification exists. [1]	1
SO-03	Is the project subject to the jurisdiction of a single nation-state?Fully dependent on Brazil's legal framework. All 182 community banks operate under Brazilian law. Instituto Palmas is a Brazilian OSCIP. The e-Dinheiro platform operates within the Central Bank's regulatory framework. Law 4476/2023 would further embed the system in Brazilian regulation. Cannot operate without Brazil's regulatory permission. [1][2]	1
SO-04	Does the project control or custody user funds?Fully custodial. Banco Palmas holds all Real reserves in its bank accounts. User balances in e-Dinheiro are held by the institution. Users cannot self-custody Palmas currency in any meaningful sense -- even paper notes are bearer instruments backed by institutional reserves. There is no self-custody option for digital balances. [1][2]	1
SO-05	Is the project resilient to key-person risk?Joaquim de Melo has been the central figure for 27 years and remains president. While the network of 182 community banks provides operational distribution, Instituto Palmas and the e-Dinheiro platform are centralized. The methodology is documented and replicated, which reduces some key-person risk. However, the founder's departure would materially impair strategic direction. [1][2]	3
SO-06	Does the project depend on any third-party service that could be revoked?Critical dependency on Caixa Economica Federal for banking correspondent services and reserve custody. Dependency on Brazil's Central Bank for regulatory permission. The e-Dinheiro platform depends on mobile network infrastructure. If Caixa revoked its partnership, the reserve-backing model would be severely impaired. [1][2]	2
SO-07	Can the project be censored — can specific users or transactions be blocked?The Credit Committee can deny loans. The bank operator controls all accounts on the e-Dinheiro platform. There is no technical resistance to censorship. Accounts can be frozen or closed by the operator. Brazilian regulatory requirements (anti-money laundering) may require blocking capability. However, no evidence of censorship being exercised against users. [1][2]	2
SO-08	Does the protocol protect transaction privacy as a monetary right?Limited privacy. The e-Dinheiro platform collects user data for account creation and transactions. Transaction records are maintained by the operator. The system operates within Brazil's data protection framework (LGPD) but this is institutional privacy management, not architectural privacy. All transaction data is visible to the operator. [1]	2
SO-09	Does the technology enforce the project's monetary rules such that governance cannot silently override them?No technological enforcement. The 1:1 peg, reserve backing, credit terms, and currency rules are policy decisions maintained by Instituto Palmas and the bank operator. The e-Dinheiro platform is a centralized application where parameters can be changed by the operator. There are no smart contracts, no immutable ledger, and no on-chain enforcement. Rules are convention and policy, not code. [1]	1

Governance

2.4

Code	Question	Score
GO-01	How are decisions about the project made?Participatory governance through Local Economic Forums, Management Councils, and Block Councils. These are open to all residents. Credit decisions are made by a Credit Committee with community credit agents. However, strategic and monetary policy decisions are made by Instituto Palmas leadership. The governance has formal elements (forums, councils) but is not fully formalized with documented procedures for all decision types. [1][2]	3
GO-02	Who has voting or decision-making power, and how is that power distributed?Decision power is distributed across community forums (open to ~32,000 residents), the ASMOCONP board, the Credit Committee, and Instituto Palmas leadership. Participation in forums is open but actual monetary policy decisions rest with Instituto Palmas. Power is more distributed than typical community finance but still concentrated in institutional leadership. [1][2]	3
GO-03	Is the governance process — and the monetary mechanism itself — transparent and publicly auditable?The governance process through public forums provides some transparency. The 1:1 peg and currency mechanics are publicly documented in academic literature and on the Instituto Palmas website. However, financial records, reserve verification, and detailed operational data are not publicly auditable in real time. The monetary mechanism is understandable but not independently verifiable. [1][2]	3
GO-04	Can governance be captured by a small group or hostile actor?Governance is concentrated in Instituto Palmas and ASMOCONP leadership. The participatory forums provide community voice but do not have binding authority over monetary policy. A small group of institutional leaders effectively controls the system. However, the community embeddedness and participatory culture provide social resistance to hostile capture. [1][2]	2
GO-05	How are upgrades and changes to the protocol or project proposed and executed?No formal upgrade proposal process documented. The transition from paper currency to e-Dinheiro (2013) and other major changes were made by the core team. Community forums provide input but the execution authority rests with Instituto Palmas. Changes are discussed but not voted on by the community in a binding way. [1]	2
GO-06	Is there a separation between governance over monetary policy and governance over operational decisions?No formal separation. The same leadership (Instituto Palmas, ASMOCONP) makes both monetary policy decisions (currency rules, credit terms, reserve management) and operational decisions (staffing, partnerships, technology). The Local Economic Forum discusses both types of decisions without structural distinction. [1]	2
GO-07	Does the project have a constitution, charter, or set of immutable principles?The solidarity economy principles and ASMOCONP's founding mission provide guiding values. The community bank methodology is documented and shared across the network. However, these are mission statements and operational methodologies, not constitutionally protected principles. The network's principles could be changed by institutional leadership without structural constraints. [1][2]	3
GO-08	Can the project's issuance rules be changed, and are monetary policy changes subject to stronger constraints than operational changes?Issuance rules (1:1 peg, reserve backing, credit terms, interest rates) can be changed by Instituto Palmas leadership. The transition from physical to digital currency and changes to credit terms have been made by the core team. There is no documented distinction between the difficulty of changing monetary vs. operational rules. Community forums provide input but no veto power. [1][2]	2

Resilience

2.8

Code	Question	Score
RE-01	Has the project survived a major crisis or adversarial event?Survived the 2005 Central Bank prosecution, which threatened the legal basis of the social currency system. The bank was acquitted and subsequently gained Central Bank recognition. Also survived 27 years spanning multiple Brazilian economic crises, high inflation periods, political transitions, and the COVID-19 pandemic. The core mechanism held through all of these. Recovered fully without design changes after the legal crisis. [1][2][3]	4
RE-02	Does the project have redundancy in its critical infrastructure?The network of 182 community banks provides operational redundancy -- if Banco Palmas in Fortaleza ceased operating, other community banks could continue. However, the e-Dinheiro platform is centralized, Instituto Palmas is a single institutional node, and the Real reserves are held in a single banking relationship (Caixa). Key infrastructure components lack redundancy. [1][2]	3
RE-03	Can the project recover from a catastrophic failure?The community bank methodology is well-documented in academic literature and the network's operational manuals. The concept is simple enough to rebuild. However, digital account data recovery would depend on the e-Dinheiro platform and its backups. No formal disaster recovery plan is documented. The 182-bank distributed network provides some resilience. [1]	3
RE-04	Is the project's design simple enough to be maintained and understood long-term?The core concept is simple and elegant: exchange Reals for Palmas at 1:1, spend locally, redeem at 1:1. The microcredit system adds moderate complexity. New contributors and communities have successfully replicated the model 182 times, demonstrating that the design is well-understood and teachable. The methodology can be explained in a few pages. [1][2]	4
RE-05	Is the project dependent on a specific technology that could become obsolete?The concept is technology-agnostic -- it started with paper notes and transitioned to digital. The core logic (1:1 peg, local circulation, microcredit) can be implemented on any platform. The e-Dinheiro platform is a specific technology choice but the model does not depend on it. Paper currency could resume if digital failed. Migration to new platforms is straightforward. [1]	4
RE-06	How does the project handle economic stress (bank runs, liquidity crises, collateral crashes, inflation/deflation shocks)?The 1:1 peg with full Real reserves means a "bank run" on Palmas is manageable -- all Palmas can be redeemed for Reals in reserve. However, the system inherits all macro stress from the Brazilian Real, including inflation. Brazil has experienced significant inflation (averaging 5-8% in recent years), which erodes Palmas purchasing power. No explicit circuit breakers or stress mechanisms exist beyond the peg guarantee. The system imports macro instability from its fiat anchor. [1][2]	2
RE-07	Does the project have sustainable funding for long-term maintenance?Funded through a 2% fee on social currency transactions that feeds a revolving credit fund, microcredit interest income (0.5-3.5% monthly on Real loans), partnerships with Caixa Economica Federal and BNDES, and government support through SENAES. Staff is mostly volunteer. The model has sustained itself for 27 years, demonstrating long-term viability. However, it depends partly on external partnerships and government support. [1][2][3]	3
RE-08	Can the system operate across extreme latency, disconnected networks, and multi-century timescales?The paper currency can operate in disconnected environments (and did for over a decade before digitization). The concept is simple enough for multi-century persistence. However, the e-Dinheiro platform assumes mobile connectivity, and the 1:1 Real peg ties the system to a single nation's currency, which may not persist over centuries. The model could be adapted but was not designed for these scenarios. [1]	2
RE-09	Is the system designed for a world where AI agents are primary economic actors?The system requires human community membership, physical presence in a neighborhood, and social relationships (neighbor guarantees for loans). The Credit Committee evaluates borrowers through personal knowledge. The e-Dinheiro platform could technically accept API interactions, but the community-embedded nature of the model assumes human participants. AI participation is not considered in design. [1][2]	2

Inclusivity

3.8

Code	Question	Score
IN-01	Can anyone in the world participate regardless of nationality, wealth, or status?Restricted to residents of Conjunto Palmeiras and participating community bank neighborhoods in Brazil. No nationality, wealth, or credit-check barriers within these communities -- the system was specifically designed to eliminate such barriers. However, geographic restriction to specific Brazilian neighborhoods is a significant limitation on universal access. [1][2]	2
IN-02	What is the minimum cost to start using the project?Zero or near-zero cost to begin. No minimum balance required. No registration fees, no proof of income, no guarantor needed for initial participation. Microcredit for consumption in Palmas is at 0% interest. The 2% transaction fee is modest. The system was designed to eliminate cost barriers for the poorest community members. [1][2]	5
IN-03	Does the project actively serve underbanked or financially excluded populations?Designed specifically for financially excluded populations. Conjunto Palmeiras was an underserved favela with no access to formal banking. The entire mission is to serve people excluded from the formal financial system. Documented adoption among Brazil's poorest communities. The model has been replicated across 182 underserved communities. This is a textbook case of serving the underbanked. [1][2]	5
IN-04	Does the project distribute economic benefits — including seigniorage — broadly, or concentrate them among insiders?Economic benefits flow to the community. The 2% transaction fee funds a revolving credit fund for new entrepreneurs. Microcredit interest income supports bank operations. No insider enrichment, no VC allocation, no founder profit extraction. Staff is mostly volunteer. Benefits are explicitly channeled back into community development. The model is non-profit and community-owned through ASMOCONP. [1][2][3]	5
IN-05	Does the project treat all participants equally under the same rules?Identical rules for all community residents. The same exchange rate (1:1), same credit terms, and same participation rights apply to everyone. No tiered access, no preferential rates for insiders. The neighbor-guarantee model is inherently egalitarian. Minor operational differences exist across the 182-bank network, but within each community bank, rules are uniform. [1][2]	4
IN-06	Does the project require identity documentation or surveillance to participate?Light identity requirements. The original model required no registration, proof of income, or guarantor. Neighbors vouch for borrowers. The e-Dinheiro platform requires registration via cellular network. Brazilian regulatory requirements (CPF registration) may apply for the digital platform. The identification is for community trust, not financial surveillance. No government ID was required in the original model, though the digital platform likely requires more. [1][2]	3
IN-07	Does the project have mechanisms to prevent wealth concentration over time?The local-circulation design inherently discourages concentration -- Palmas can only be spent at local businesses, not accumulated for speculative gain. The microcredit model targets small producers (loans up to R$15,000). The 2% fee recycled into community credit funds redistributes value. No formal demurrage or progressive fees exist, but the design structurally discourages hoarding. [1][2]	4

Frequently Asked Questions

What is Banco Palmas and what problem does it solve?

How is money created in Banco Palmas?

Issuance is restricted to Banco Palmas and its network of community development banks. Only the bank can issue Palmas currency. Individuals obtain Palmas by exchanging Reals, receiving wages in Palmas, or through microcredit loans.

How does Banco Palmas maintain stable spending power?

No explicit stability mechanism beyond the 1:1 peg to the Brazilian Real. Stability is entirely imported from the Real through the fixed exchange rate and full reserve backing. The protocol itself has no algorithmic targeting, no rebase, no independent adjustment mechanism.

Is Banco Palmas independent from fiat currencies?

Hard-pegged 1:1 to the Brazilian Real. One Palma equals one Real by definition. The unit of account is entirely borrowed from the fiat system.

Who controls Banco Palmas and can it be shut down?

The Brazilian government or Central Bank could shut down Banco Palmas. The 2005 legal prosecution demonstrated this risk, though the bank prevailed. The project operates under OSCIP legal status and depends on regulatory permission.

How widely adopted is Banco Palmas today?

Banco Palmas itself has 20,000 digital accounts and 3,000+ registered businesses. The broader network of 182 community banks across Brazil serves additional users. The Conjunto Palmeiras neighborhood has 32,000 residents.

Is Banco Palmas still active and growing?

Fully active and operational. Banco Palmas reached 20,000 digital accounts in 2025 with the e-Dinheiro platform, which moved nearly R$1 million in the local economy. The network continues to expand with 182 community banks across Brazil.

What are the main risks or weaknesses of Banco Palmas?

Weakest categories: Fiat Independence (1.5) and Sovereignty (1.5): The Palmas currency is structurally a fiat wrapper: pegged 1:1 to the Brazilian Real, backed 100% by Real reserves held in a traditional bank, with no sovereign unit of account and no path to fiat independence. The system is fully custodial, closed-source, censorship-capable, and operates entirely within a single nation-state's regulatory framework. These are not incidental gaps but fundamental design choices.

What makes Banco Palmas unique from an M69 perspective?

Strongest category: Inclusivity (3.8) and Traction (3.5): Banco Palmas is a genuine force for financial inclusion, designed from the ground up to serve Brazil's poorest communities with zero-cost entry, no documentation requirements, and community-based trust. Its 27-year track record, 182-bank network, extensive academic recognition, and active founder leadership represent exceptional real-world traction for a community currency.

How is Banco Palmas's M69 Score calculated?

Banco Palmas scores 2.4/5.0 overall. Pillar scores: Monetary Sovereignty 2.0, Civilizational Durability 2.2, Universal Adoption 3.6. Strongest: Inclusivity (3.8). Weakest: Sovereignty (1.5).