Study Info

Public Banking The Public Banking Forum of Ireland

Banking in the Public Interest

What is it? – Who has it? – Why we need it? – How we can get it?

Public Banks are public welfare-oriented institutions and, instead of profit maximisation, their aim is the sustainable development of the real economy within their business territories. 40% of all Banks in the world are Public Banks mainly in prosperous & emerging countries like Germany, Brazil, Russia, India & China. The BRIC countries have grown 92% in the last decade compared with 15% for the west. The West is now in decline while the BRICs continue to prosper. Less than 10% of all loans granted by our current banking system are given to businesses.

There are basically four models: The German Savings Bank model, the Co-op model, the Japan Post Bank model & the Bank of North Dakota model.

The German Savings Banks Founded 1778, have 40% of the total German market and provide 42.7 per cent of all finance to German businesses.

The German Public Savings Banks are

1.       Operated on commercial principles with the aim of maximising sustainable lending and not on maximising profits.

2.       Operated on the Principle of “Local deposits into local loans” keeping capital in their own area.

3.       Surpluses remain with the Bank & within the region: Profits are used to increase equity and for non-profit purposes (the public benefit principle).

4.       Banned from engaging in financial speculation.

5.       Only allowed to lend only to local people and businesses in its designated catchment area.

6.       Controlled by stakeholders from the local community.

7.       Independent of political influence and control.

8.       The Joint Liability Scheme provides protection for all Savings Bank Branches.

In the current recession between 2008 & 2011 German Public Banks increased lending to Small & Medium Size Enterprises (SME’s) by 17%.


Co-op Banks  Founded 1840

“Volksbank” (German for “people’s bank”). There are Volksbank networks in at least ten countries. Germany has 1,099 independent local Volksbanken with 13,211 branches making up 24% of the German banking market.

Japan Post BankPostal savings was introduced to Japan in 1875

Japan Post Bank (JPB), now the largest depository bank in the world. Not only is it a convenient place for Japanese citizens to save their money, but the government has succeeded in drawing on JPB’s massive deposit base to fund a major portion of the federal budget. Rather than using its deposits to back commercial loans as most banks do, Japan Post invests them in government securities. That means the government is borrowing from its own bank and its own people rather than from foreign bondholders. The Japanese government can borrow 10-year money at 1 percent and lend it to the U.S. at 1.6 percent (the going rate on U.S. 10-year bonds), making a tidy spread.

Although theoretically privatized in 2007, it has been a political football, and 100 percent of its stock is still owned by the government. To keep the system stable and sustainable, the money just needs to come from the nation’s own government and its own people, and needs to return to the government and people. Ellen Browne

 The Bank of North Dakota Established 1919.

The BND is similar to a Public Central Bank i.e. creates its own credit. It is a depository for all state tax collections and fees. It pays a competitive rate to the state treasurer. It plows those deposits back into the state of North Dakota in the form of loans. It invests back into the state in economic development type of activities.


What make these types of Public Savings/Lending Institution so successful?

 In all cases the profit & the interest on lending is returned to the institution to boost its capital & returned to the community in new loans. This amount of interest can be from a few percent on short term loans to as much as 150% in the case of mortgages. All this is returned to the institution & the community. Under our current system the Interest and profit is taken out of the community & economy. This lack of adequate currency in the economy causes a slow down or a recession.

These Public Institutions also benefit the economy by the type of loan they offer i.e. loans that support SME’s. This is the type of loan that Big Banks will not offer as they do not know their customers and tend to only lend where there is an asset involved they can repossess and sell off if there is a problem with repayment.

This type of lending over the long term does not support the economy or those who create jobs. It just fuel Boom-Bust cycles as was the case with our property bubble.


If we refuse to allow our government to make money through public enterprises, we will be destined to bear the burden of supporting government with our taxes, while we watch countries such as China, Korea and Japan, which do allow public industries, enjoy the fruits of that efficient people-serving arrangement. Ellen Browne

How we can get it?

The German Savings Banks, The Sparkassen sell their system.

Co-op banks can be formed.

We could expand out Post Office service to a Post Bank service. 

The 99.2% State owned PTSB is about to be split into a Good & Bad bank and sold off. Why not retain the Good bank and convert its network of 70 odd branches to Public Banks. This alone would be a major start.

Credit Unions that are under threat of being subsumed by bigger CU’s or taken over by banks could convert to Public Banks and retain their ethos.

What are the consequences of not putting a Public Banking system in place?

A public banking system can be put in place at a minimal cost while the cost through Bail-outs or Bail-ins of getting our current banks back to their original state of “not serving the real economy” could be as much as 50bn? 100bn? Who knows? “Ireland Exits Troika Bailout To Prepare For Bail-ins” Reggie Middleton. Michael Noonan passed the Bail-in process into EU law during our EU Presidency.

The Public Banking Forum of Ireland

Banking in the Public Interest


“Exploring a Public Bank for Vermont”

(A Public Central Bank) Link to full study below.

Summary of Findings of Vermont Study

State of Vermont Population 622,000

Economic Impact on State of Vermont

2,535 New Jobs

$192 million in value added (Gross State Product)

$342 million increase in state output

If State deposits were used to finance state capital expenditures,

funding through a public bank could save close to $100 million in interest cost on capital spending.


 The Public Banking Forum of Ireland estimates that if Ireland had 64% Public Banks as in Germany, we could make the following savings.

Interest on the Governments debt:

The Government could borrow from these Public Banking Institutions at a rate of 1% as in Japan. The Government is currently being charged of between 3.8% and 5.8% on its borrowings. So let’s take an average of 4.8%. This 4.8% can be reduced to 1% by borrowing from Public Banks, that’s a reduction of 79% on the interest on our Government debt.

The interest on the Governments borrowings for 2014 will be €9bn.

So if we borrowed from our own Public Banks we could reduce that €9bn by 79%, that’s a saving of €7.11bn. Reducing the Interest from €9bn down to €1.89bn.

 Interest on the Publics Personal & Business debt:

If 64% of our banks were Public Banks as in Germany. Taking it that all the Interest & Profits of the Public Banks are returned to the Public Bank and community an indirect reduction of 64% of the interest on the publics personal & business debt could be achieved.

The interest on the publics personal & business debt will be €30bn in 2014, so this could be indirectly reduced to €10.8bn because all the interest & profit on lending by Public Banks is returned to the Public Bank & community.

How is money really made by banks? – Banking 101 (Part 3 of 6)


List of relevant study documents:

  1. Public Banking for Vermont 2013. A study of by The University of Vermont“Exploring a Public Bank for Vermont” And comparison to North Dakota which has a Public Bank. (Similar to a Public Central Bank working as a true Public Central Bank)

  1. Simpsons Sparkassen CIVITAS. A Commentary & Case study of The Sparkassen, the German Public Banking System & a comparison to the UK system.

  1. Dr Ellen Brown Presentation in Ireland Oct 2013. Ellen is President of the Public Banking Institute in the US.

Public Banking Forum of Ireland Power Point — “The Irish Debt Crisis: Time to Think Outside the Box”

  1. Dr Thomas Keidel Constitutional Elements of Public banking in Germany

  1. CIVITAS Ideas for Economic Growth

  1. Dr Thomas Keidels CV

  1. Christopher Simpsons Personal Profile

8. How Banks Create Money. 97% of all money, as debt (Loans with Interest).

9. Detailed, extensively researched concept paper prepared by the Postal Service’s Inspector General.  “Providing Non-Bank Financial Service for the Underserved”

Mirabile Dictu! Post Office Bank Concept Gets Big Boost            Scribd doc


Links: Irl Irl US Blog US US

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