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.

Grameen accepts no funds from outside donors, and finances all its loans from deposits. It does not require any collateral. Borrowers in groups of five self-regulate each other, ensuring repayment.

The bank claims a loan recovery rate of 98 per cent.

The success of the bank has spurred similar efforts around the world, including Grameen America, which said its bank loans have just topped $1 million, with 380 borrowers getting loans of about $1,500 to $2,500.

The bank's US push has been met with some skepticism that the Grameen model would work here. But the 68-year-old Yunus said the financial crisis has proved that social businesses like Grameen are actually more sound than traditional banks.

PARALLEL SYSTEM

"They say 'total reliance on collateral and lawyers and it is 100 per cent foolproof, nothing can go wrong.' And built a whole system on that belief. And this disaster has proven everything wrong."

"At the same time a parallel system has been growing which is microcredit. No collateral, no lawyers. Even this huge big financial earthquake can't shake them."

When it comes to helping the poor, Yunus argues for entrepreneurism over charity or government assistance, believing it to be self-sustaining.

"If people lose jobs where do they go? Do they fall back on welfare? If lending money, $2,200 to a person, can create a job, self-employment, isn't it a better idea?"

Yunus believes technology has been crucial to the micro credit movement by effectively shrinking the globe.

He notes that the mobile phone is now everywhere, in even the world's poorest villages and envisions a time in the near future where the simple device is used to connect the poor to health care access, banking and other services.