Prompt for Discussion

Contributors: Gerald Epstein, Iain Frame, Rory Van Loo, Andrew Cumbers, Franziska Paul, Michael Swack, Ellen Brown, Nancy Ryan, Rohan Grey, Wesley Marshall, Nadav Orian Peer, Dan Rohde, Jean-Philippe Bombay, Christine Desan, and more to come!

Modern capitalism makes a distinctive commitment to bank investors at an elemental level: they will control the inflow of new money to the economy. Aside from the monetary base defined by public authority, retail banks operating for profit lend by creating money from credit. That privilege means that they can offer lower rates on loans, an advantage that gives them incomparable influence over how credit flows and who receives it. In other words, commercial banks significantly structure the distribution of capital because of their foundational place in the monetary architecture.

In this roundtable, we consider an alternative. Communities can establish banks that are public rather than private. Those banks operate with the same advantage – creating new money to issue into the economy – but can lend to promote social welfare rather than profit maximization. In fact, communities in other eras and places have been much more pluralistic than we are in the United States today, where the State of North Dakota alone operates a public bank.

We invite contributors to consider how public banks would change the monetary ecosystem. We focus in particular on banks that would hold public funds. (In a later Roundtable, we will compare public banks designed to hold customer deposits.) Should states and municipalities diversify the depositories they use by chartering public banks? How could that initiative broaden access to credit by communities currently shut out? Could the endorsement of public participation in banking transform our assumptions about the character of money creation – or would it entrench the dominance of banking? Are there viable political avenues towards establishing public banking? If not, why not? Can a matter as esoteric as banking become a popular cause and if so, how? What would the consequences of expanded popular debate about banking be at a wider level?