Public Banks are …
• Viable solutions to the present economic crises in US states.
• Counter-cyclical, meaning they are capable of reducing the negative impact of recessions, because they can make money available for local governments and businesses precisely when private banks decrease lending.
• Potentially available to any-sized government or community able to meet the requirements for setting up a bank.
• Owned by the people of a state or community.
• Economically sustainable, because they operate transparently according to applicable banking regulations
• Able to offset pressures for tax increases with returned credit income to the community.
• Ready sources of affordable credit for local governments, eliminating the need for large “rainy day” funds.
• Required to promote the public interest, as defined in their charters.
• Constitutional, as ruled by the U.S. Supreme Court
… and are not
• Operated by politicians; rather, they are run by professional bankers.
• Boondoggles for bank executives; rather, their employees are salaried public servants (paid by the state, with a transparent pay structure) who would likely not earn bonuses, commissions or fees for generating loans.
• Speculative ventures that maximize profits in the short term, without regard to the long-term interests of the public.
Why Public Banking?
Public banking frees the credit potential of public revenues and then harnesses this public wealth to create sustainable, abundant and affordable credit. This credit — our credit — supports our economy and citizens if it is then used to build economic capacity (think renewable energy, sustainable agriculture, etc. — things that private banks do not fund).
PBI is committed to public banking becoming a mainstay of support for the new economy.
Common Misperceptions of Public Banking
In every venue in which PBI has presented the case for public banking, we have heard very similar counter arguments against it. Read them here.
Read what Thomas Edison had to say about the government issuing money rather than bonds.
This text originally appeared on the Public Banking Institute’s website.