Increasingly, major international financial institutions are recognising the positive and catalytic role public banks can serve in the coming low carbon climate resilient transition.
Further, international NGOs and critical scholars argue that public banks can play a significant role in financing a just and equitable energy transition.
In the United States, federal law forbids credit unions from making commercial loans that exceed 12.25% of their total assets.
[12] In the ancient world, prior to the emergence of price-adjusting markets, temples provided and oversaw weights and measures critical to exchange.
[14] Most prominent in the 14th century, Mons Pietatis (Mount of Piety) were charitable institutions of credit that lent money at low- or no-interest, upon the security of objects left in pawn, with the stated aim of protecting clients from usury.
The charter of the Basel city council stated that "our municipal bank is being founded to benefit the public good."
[22] Sparkasse executive vice president Wolfram Morales has pointed out that public banks played a major role in Germany's transition from centralized fossil fuel energy to diverse renewables, and that Germany's Sparkassen banks have been significant contributors to the renewables transition.
[23] Finance writer Frances Coppola argues that Germany's Landesbanken are in various stages of "zombification," inefficient and poorly profitable, following the global economic crisis of 2008.
[24] Writing for the Public Policy Institute for Wales, Craig Johnson similarly argues that Sparkassen banks have had problems producing profits because of its inability to give robust returns to savers.
Following the war, the bank subsidized farmland and education for veterans, funded infrastructure, airports, and technology, and helped the government establish pensions and Medicare.
[30] The low taxes resulting from these public finance mechanisms were partly responsible for the rapid economic expansion of the colonies.
[31] The Bank of Pennsylvania, chartered in 1793, allowed the state to use its dividends to finance government expenses without any direct taxes for the next 40 years.
When the state was involved in a bank's governance, its representation on the board of directors ranged from minimal to a majority plus public selection of the president.
The Bank of North Dakota was established by revolutionary populists in the Non-Partisan League, or NPL, whose platform was "public ownership of economic infrastructure.
"[36] Limited access to credit exacerbated farmers' crises in the latter years of the 19th century and was instrumental to agrarian populist revolt.
[37] In response to price manipulation and market domination from Minneapolis and Chicago, the NPL advocated state control of mills, grain elevators, banks and other farm-related industries.
[42] Yolanda K. Kodrzycki and Tal Elmatad of the Federal Reserve Bank of Boston's New England Public Policy Center argued in a report in 2011 that North Dakota's model was inapplicable to Massachusetts, which has a much larger population and more complex lending needs.
They argue that the costs of starting up a state-owned bank "could be significant," requiring "funds roughly equal to one-fifth of the state's general obligation debt.
[47] In 2016 and 2017, several candidates nationwide ran on public banking platforms, with some, like New Jersey Governor Phil Murphy, achieving victory.
[48][49] A renewed interest in municipal public banks has driven movements in Los Angeles, Oakland, Seattle, Santa Fe, San Francisco, and other cities.
AB 857 received wide popular support with 180 major labor unions, civic, community organizations, and the California Democratic Party endorsing the bill.
[54] In a show of support by local governments, 17 California cities and counties passed local resolutions to endorse AB 857, the Public Banking Act, including: the cities of Los Angeles,[55] San Diego, Oakland,[56] Long Beach,[57] Santa Rosa,[58] Beverly Hills,[59] Berkeley,[60] Richmond,[61] Santa Cruz,[62] Huntington Park,[63] Eureka, and Watsonville,[64] the Counties of Alameda[65] and Santa Cruz,[66] and the City and County of San Francisco.
[68] In light of the fact that many progressive ballot issues that challenged well-funded business interests routinely get buried by 3–1 margins, this strong showing was all the more impressive.
Newness has been California's stock in trade since its founding, and when accompanied by talent and judgment, innovation has produced many of the state's signature enterprises.
"[70][71] In March 2019, the San Francisco Office of the Treasurer & Tax Collector published a 151-page feasibility study for a public bank.
For example, Robert C. Hockett of Cornell Law School argues that the belief that banks are mainly intermediaries between savers and borrowers is false.
"[80] This became apparent to the directors of the Bank of Amsterdam in the 17th century, when they realized that loaning out deposits created money for borrowers while the same amount still sat in the accounts of the original depositors.
[32] Professor Richard Werner of the University of Southampton has utilized empirical research to conclude in favor of the credit creation theory, and that "banks can individually create money out of nothing.
[86] Mark A. Calabria of the Cato Institute cites the corruption of Fannie Mae and Freddie Mac as evidence of public sector finance's mismanagement.
[88] Researchers at the John F. Kennedy School of Government Department of Economics at Harvard University, Rafael La Porta, Florencio Lopez-de-Silanes, and Andrei Shleifer noted in a 2000 paper that government ownership of banks is pervasive around the world and in particular countries with low levels of per capital income and underdeveloped financial systems.