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!

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 local or regional public banks.
• In New Jersey, Gov. Phil Murphy created a commission to explore establishing a public bank. As a first step, the New Jersey Social Impact Investment Fund (SIIF) was created and seeded with $20 million but is not yet operational.
• In Pennsylvania, the Philadelphia City Council passed a bill in 2022 by a 15–1 vote to establish the Philadelphia Public Financial Authority (PPFA); however, the PPFA is not yet operational.
• In New Mexico, bills to establish a state public bank have been under consideration in both Houses.

To learn about more state- and municipal level campaigns, see this map.
To learn more about public banking, visit the Public Banking Institute website.
This infographic, “How Public Banks Excel,” from the Public Banking Institute details various types of depository and non-depository financial institutions, including public banks.

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

(Note that we often highlight the latest news about public banking, Wall Street, and the need for democratizing our financial system on social media. Please follow us on Bluesky and on Facebook.)

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