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A Green Light for Public Banks?

Paper Session

Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM (PDT)

Manchester Grand Hyatt, Pier
Hosted By: Association for Social Economics & Association for Evolutionary Economics
  • Chair: Louis-Philippe Rochon, Laurentian University

Public Banks: A Source for Infrastructure Funding and Potential Economic Impact

Deborah Figart
Stockton University


This paper shows how regional input-output modeling can be used to estimate the economic impact of a proposed public bank in a the City of Philadelphia and a State Bank of New Jersey. Empirical analysis estimates the positive increase in output, earnings, employment, and value-added for each newly proposed public bank. In New Jersey, state output could rise by over $54 billion and over 243,000 new jobs could be created. In Philadelphia, gross city product (value-added) could rise by $3 billion and nearly 11,000 new jobs are projected.

A Public Banking Option

Thomas Herndon
Loyola Marymount University
Mark Paul
New College of Florida


To foster a more inclusive and accessible economy and society for all communities in the U.S., the public provision of banking goods and services by the government is an important option to consider. Banks today are increasingly consolidating branch locations, while also moving away from low-cost financial services to high-profit activities, leaving marginalized Americans underserved and left behind. Without access to basic banking services, such as checking and savings accounts or small loans, consumers are vulnerable to a host of financial abuses. In response, this paper argues for the public provision of household financial services. In particular, we argue for a public banking option that would directly compete with the outsized (and often predatory) power of the private household financial services sector.

Banking as a Public Good, or Why the Public Banking Option Is Desirable in Contemporary Economies

Mario Seccareccia
University of Ottawa


Following Minsky (1994), the banking system provides two key services that are central to the well-functioning of contemporary capitalist economies. Firstly, together with central banks, private banks are suppliers of our economy’s means of payments, without which contemporary economies would not exist. Secondly, as creators of credit-money, banks play an essential role both in the financing of production and, macro-economically, in supporting the process of capital accumulation. These services are all of an existential nature to contemporary capitalism, and they are supplied by a banking sector that is already de facto in the nature of a public-private partnership, through risk sharing (such as public deposit insurance and central banks as lenders of last resort) and implicit bailout provisions since, while one private bank can be allowed to fail, the banking sector as a whole cannot be. The paper will also discuss briefly the Keynesian issue of the socially desired composition of overall spending and the role that public banking can play.

Public and Private Financing of the Sustainable Development Goals (SDG)

Massimo Cingolani
European Investment Bank


The United Nations’ SDG are key global challenges to be met by the international community by the year 2030 in areas such as poverty, inequality, climate, environmental degradation, prosperity, as well as peace and justice. To be met, they have been estimated to require additional investment in the order of USD 2.5 trillion per year worldwide. The paper discusses the implications of different models for the financing of such investment effort by public and private banks. A conceptual framework based on the monetary theory of production is offered to address the evaluation of different possible forms of cooperation between the public and the private sectors for the realization of these SDGs.

Beyond Fiscal and Monetary Policies: A Post-Keynesian Case for Public Banks

Wesley Marshall
Autonomous University of Mexico-Iztapalapa
Louis-Philippe Rochon
Laurentian University


Having addressed previously (see Marshall and Rochon, 2019) the need for post-Keynesians to discuss not only monetary and fiscal policies, but also credit policy, we advocated in favor of the creation of public banks as a necessary policy tool in the pursuit of full employment. In this paper, we go beyond the academic debate regarding public banking and focus more on its virtues as an instrument of public policy. We do this in two ways. First, we discuss the limitations of both monetary and fiscal policies in the absence of an explicit credit policy coupled with the institutions to carry it out. Our main argument is that many financial needs of the economy are better addressed in a more focused and local fashion than through macroeconomic financial management. The introduction of public banking at the state, municipal and city level would add flexibility and strength to credit policies directed at sectors determined to be priorities. A more layered banking sector with a diversity of ownership structure would create greater financial stability at the national level, while at the same time allowing greater transparency and participation in decision making at the local
level. We put specific emphasis on the latter factor. When geographic and social space can be reduced regarding investment decisions, local problems can find financing for their solutions, strengthening processes of political participation and economic development.
JEL Classifications
  • B5 - Current Heterodox Approaches