Public Banking 101

An Introduction to Public Banking

What is a Public Bank?

A public bank is a bank owned by the people through their representative government and operated in the public interest. Government revenues are deposited in the bank. The bank then makes loans to benefit communities and businesses.

Like any bank, a public bank does not lend out its deposits. The deposits plus the capitalization of the bank, along with any other assets and liabilities. determine how much a bank can loan. The loan is actually an asset on the bank’s balance sheet because it has to be paid back to the bank!

This powerpoint presentation describes both the basics of public banking and our vision for a public Bank of Massachusetts.

Public banks operate successfully around the world. In Germany the KfW, a state public bank, was key to Germany’s reconstruction after WWII with funding from the German Marshall Fund. Germany also has regional and local public banks, some dating back to the 19th century. In New Zealand people use Kiwi banks at their post offices. Public banking represents 40% of all banking around the world.

Here in the U.S., the state of North Dakota has had a state public bank since 1919.

When banks heartlessly foreclosed on farmers, they organized the Non-Partisan League. After farm to farm organizing to elect members of the Non-Partisan League, they won control of both Houses of the state legislature and the Governorship and passed a law to create a state public bank. Then they overcame opposition from the banks which tried to prevent them from capitalizing the bank and created the Bank of North Dakota (BND). Today BND is thriving with loans to businesses, farms and more recently to students and to assist home owners with mortgages.

And the state’s local banks are thriving as well. This is because BND does participation loans with local banks. The local bank originates the loan and does the due diligence to make sure the loan is credit worthy.  If the loan is too big for the local bank, they go to BND to join them in making the loan.  The local bank gets the origination fee and doesn’t have to worry about being taken over by a larger private bank.  It’s a win/win.  A Massachusetts public bank could make the same kind of loans with local banks.

Today there are campaigns for public banks across the country. Here are a few examples.

  • In California, citizens passed a bill in 2020 to allow cities and counties to create public banks. From San Francisco to Los Angles residents are mobilizing to create their own public banks, and are planning to introduce legislation in an upcoming session to create a state-level public bank.
  • In New Jersey, Governor Phil Murphy, a former Wall Street banker, has created a commission to establish a public bank.
  • A bill has been introduced to create the Philadephia Public Banking Authority.
  • In Arizona, a bill has been introduced to create a state public bank with support from credit unions in their state.

To learn about more state- and municipal level campaigns, see this map.
To learn more about public banking, visit the Public Banking Institute website.


Here are links to articles, recommended books, videos and other resources on public banking.

Note that we often use Twitter to highlight news or news articles about public banking, Wall Street, and the need for democratizing our financial system. Please follow us at @masspublicbank.

by Steering Committee and Advisory Committee members

Steering Committee co-chair Ruth Caplan edited a Public Banking issue of the Alliance for Democracy’s thematic journal, Justice Rising. It can be read and downloaded here.

Download our fact sheet to read and share.

Banking in Nine Words, by Dave Lewit

Benefits of a Public Bank for Cities and Municipalities, by Steve Snyder

Community Bank Benefits of Partnering with a Public Bank: FAQs, by Steve Snyder

Recommended books and journals  on public banking, community finance, and solidarity economics
(Please consider ordering these books through your local independent bookstore.)

Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free, by Ellen Hodgson Brown

The Public Bank Solution: From Austerity to Prosperity, by Ellen Hodgson Brown

Checking the Banks: The Nuts and Bolts of Banking for People Who Want to Fix It, by Tom Sgouros

Creating Wealth: Growing Local Economies With Local Currencies, by Gwendolyn Hallsmith and Bernard Lietaer

Owning Our Future: The Emerging Ownership Revolution, by Marjorie Kelly

Web Resources
The Public Banking Institute’s Learn about Public Banking page features links to articles, videos, podcasts, and PBI press releases.

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