Public Banking for Wales, Ireland and Scotland: Promise and Possibilities

Dr. Ian Jenkins of Arian Cymru (Money Wales) has written two excellent articles on why Wales should have its own bank and how that might be accomplished. The shorter article is reprinted below, and the longer, more technical article is linked here.

Dr. Jenkins is hosting an event in Cardiff on September 26th titled “Banking and Economic Regeneration Wales,” at which Marc Armstrong, executive director of the Public Banking Institute, will be speaking, along with Ann Pettifor of the New Economics Foundation and several Welsh leaders. As Dr. Jensen states:

This is in an issue on which Wales could provide leadership on an EU-wide level, a matter in which a small nation could make a big difference.

That is also true for Ireland and Scotland, where interest in public banking is growing. I will be speaking on that subject at a series of seminars in Ireland on October 12th-15th (details here), and I spoke late last year in Scotland on the same subject (see my earlier article here).

Here is Dr. Jenkins’ perceptive piece, which applies as well to Ireland and Scotland.

Public Banking for Wales: Escaping the Extractive Model

 The economic history of the past 30 years has been, by and large, that of an uncontrolled expansion of the financial sector at the direct expense of the so called ‘real’ economy’ of manufacturing and production. This expansion has been brought about by the hegemony of the free-market doctrines, based principally on fundamentally ideological beliefs in deregulation and privatisation, which have become known as ‘neo-Liberal’ or ‘neo-Classical’ economics.

As former US bank regulator William K. Black put it, ‘In the world we live in, finance has become the dog instead of the tail […] They have become a parasite’. The private banks have established themselves in this position through the control of the primary mechanism by which money is created within our system: the issuing of credit. In this paper I will aim to briefly outline how this credit function could be redirected from speculation and bubble creation, which constitute the dominant directions of credit issuance under private banking, towards more stable and sustainable areas which would serve the public interest instead of those of shareholders and bank CEOs. This is not a theoretical method, but rather one which throughout the post-WW II period saw the German Landesbanken facilitate the growth of the mittelstand sector of Small and Medium Sized Enterprises (SMEs), as well as in the present day constituting the means by which the state-owned Bank of North Dakota (BND) contributes significantly to North Dakota being the only US State to run a budget surplus throughout the post-2008 crisis.

In order for a productive economy to exist there must be adequate streams of affordable credit and it is the absence of such constructive investment which, I would submit, has been a vital contributing factor to the decline of the Welsh economy, and indeed that of the UK, in the past 30 years. Before continuing with this analysis it is worth briefly examining the current banking system and the effect of its operations on the real economy, in Wales as elsewhere.

Banking Now: The Extractive Model of Credit Creation

‘What is money and where does it come from?’ are, remarkably, questions rarely asked in mainstream economics and even less so by members of the public; yet the answers to these two questions hold one of the keys to understanding the (mal)functioning of our economic system and for devising a new, more democratic direction. As the great American economist G.K. Galbraith observed in his fascinating study of the history of banking Money: Whence It Came, Where It Went, ‘The study of money, above all other fields in economics, is the one in which complexity is used to disguise truth or to evade truth, not to reveal it’ (Galbraith: 1975, p.1), stating later in the same text that, ‘The process by which banks create money is so simple that the mind is repelled’ (Galbraith: 1975, p.18). So what is money? The instinctive answer to this question for most people is that money is the physical notes and coins produced by the government; they may even go on to say that this money is produced at the Royal Mint at Llantrisant, ironically making this physical money one of an increasingly diminishing range of Welsh exports. Yet physical money of this sort, in the form of notes and coins, only accounts for approximately 3% of money in circulation. This version of money is indeed the product of government, as under the Bank Charter Act 1844 the power to create banknotes (and coins) became the exclusive preserve of the Bank of England, a power exercised in agreement with Westminster. Since the so-called ‘Nixon shock’ of 1971 ended the existing Bretton Woods system of international financial exchange by unilaterally cancelling the direct convertibility of the United States dollar to gold the banknotes of the Bank of England/UK government have been essentially what is known as a ‘fiat’ or ‘soft’ currency; that is, a monetary unit which is not backed by any ‘hard’ commodity such as gold and, consequently, is limited in quantity only by the inflationary consequences of overproduction.

So what accounts for the other 97% of money in circulation? To answer this question it is necessary to understand the nature of credit issuance through fractional reserve banking, which is neatly encapsulated by the Statement of Martin Wolf that, ‘The essence of the contemporary monetary system is the creation of money, out of nothing, by private banks’ often foolish lending’ (Wolf: 2010)[i]. This process is profoundly counter-intuitive to most members of the public who would assume that banks lend the deposits they receive, but this is not the case at all: the money issued through the process of creating a loan is created out of nothing, subject only to the rules for capital reserves contained in the Basel Accords. Two publications produced by the Bank of England make the current mechanism of money creation clear:

By far the largest role in creating broad money is played by the banking sector [...] When banks make loans they create additional deposits for those that have borrowed the money.  (Bank of England: 2007, p.377)

The second publication, a transcript of speech in 2007 by Paul Tucker the Executive Director (Markets) for the Bank of England and a Member of the Monetary Policy Committee also states that:

Subject only but crucially to confidence in their soundness, banks extend credit by simply increasing the borrowing customer’s current account […] That is, banks extend credit by creating money.

The current system is a product of the fact that the Bank Charter Act 1844 prohibited banks from printing banknotes, but did not prohibit the issuing of money by ledger entry through the making of loans: with the advent of electronic systems in the past thirty years this facility to ‘print money’ by making entries into borrowers accounts with the stroke of a keypad has expanded significantly. Currently, then, there is a system in place whereby the power of money creation is largely in the hands of private corporations who are able to make sizeable profits through the levying of interest for their performance of this function. This system also leaves the private banks with the decision as to which sectors of the economy should be afforded lines of credit, and in the past thirty years this has moved increasingly away from the productive ‘real economy’ and towards speculation and bubble creation: with the results we now experience. Part of the deposit base of private banks is the income of local and national government and this leads to a situation wherein private corporations use public money as a deposit base for speculation and lending for speculation (See Fig.1).


pbi fig 1

Source: The Public Banking Institute (

The Idea of a State Bank: Re-investment of Interest from Productive Credit Provision

The best current example of a functioning state bank is that of the Bank of North Dakota (BND) in the United States. The way in which the bank functions is best described in its own words:

 The deposit base of BND is unique. Its primary deposit base is the State of North Dakota. All state funds and funds of state institutions are deposited with Bank of North Dakota, as required by law. Other deposits are accepted from any source, private citizens to the U.S. government.

This framework provides the state of North Dakota with what is most needed for a local economy to thrive: affordable (and available) credit for SMEs and resources for the improvement of infrastructure. Under the state banking model the benefit derived from the interest accrued in the credit-issuing process is returned to the state and can be re-invested or spent in accordance with the public interest, instead of being paid to shareholders in dividends or given away in absurd bonuses to bankers who merely carry out a largely mechanical function, however subject to mystification and obfuscation: with myopic incompetence in many cases in the last thirty years (See Fig.2).


pbi fig 2

Source: The Public Banking Institute (

In the case of North Dakota this has resulted in the state being the only US state to run a budget surplus throughout the financial crisis post-2008 and this must make their model at least worth considering in a Welsh context.

The Report of the Silk Commission 2012

In Part 1 of its remit The Silk Commission was asked to consider the National Assembly for Wales’s current financial powers in relation to taxation and borrowing and its report was produced in November 2012. The commission concluded that the Welsh Assembly government should be granted borrowing powers, basing this conclusion partly on ‘international evidence’ drawn from a single World Bank publication from 1999:  making this ‘evidence’ neither ideologically neutral, being the product of an organisation which is the éminence grise of global neo-liberalism, nor current, with many of its conclusions being weighed and found wanting by the post-2008 financial crisis. The findings of the commission contains no consideration whatsoever of the role of banks in money creation through credit issuance, and the attendant problems of misallocation of investment, and no investigation of the success of public banking in the international context, for instance in the BRIC economies, or of the potential role of public banking in Wales. For this reason I feel that it is important that these issues be brought into the debate on the Welsh economy, as to ignore it would be to exclude a potentially democratising and sustainable banking system from the national conversation and would merely make any granting of borrowing powers to the Welsh Assembly Government nothing more than a new stream of income for the private banking system. If all that ‘responsibility’ means in the fiscal context is for Wales as a political unit to submit itself to the ‘discipline’ of the bond markets, then this is indeed a very sorry direction in which the politicians of the Welsh Assembly are taking both their current constituents, and those yet to be born.


There is a widely perceived need for change to the economic system today and especially for reform of the way in which banking operates, with the majority of the population feeling, rightly, that there is ‘something wrong’ with the way in which the economy, and particularly banking, currently functions. I believe that a public bank, properly instituted with all due diligence and care for regulation and democratic supervision, can provide one of the possible directions of sustainable change which is so needed in Wales and beyond. The model suggested by the Welsh Conservatives, as it stands, would be no substitute for a real public bank: a bank which would recoup its profits, gleaned from interest on productive loans to the real economy, for the good of the people of Wales. A true Welsh public bank would be in a position to reinvest its profits in socially beneficial areas like education, infrastructure and the health service, instead of funding bonuses and maximising shareholder dividends for a privileged few in the increasingly rarefied world of finance.



Ahmad, J (1999) ‘Decentralising borrowing powers’ World Bank

Berry, S., Harrison, R., Thomas, R., de Weymarn, I. (2007) ‘Interpreting movements in Broad Money’, Bank of England Quarterly Bulletin 2007 Q3, p. 377. Available at quarterlybulletin/qb070302.pdf

The Bank of North Dakota:

Brown, Ellen, Web of Debt (Baton Rouge: Third Millenium Press, 2012); The Public Bank Solution (Baton Rouge: Third Millenium Press, 2013).

Commission on Devolution in Wales (Silk Commission) (2012) ‘Empowerment and Responsibility: Financial Powers to Strengthen Wales’ (full report at:

Tucker, P. (2008). ‘Money and Credit: Banking and the macro-economy’, speech given at the monetary policy and markets conference, 13 December 2007, Bank of England Quarterly Bulletin 2008, Q1, pp. 96–106. Available at:

Welsh Conservatives, A Vision for Welsh Investment (January 2013) Available at:

Wolf, Martin, ‘The Fed is right to turn on the tap’, The Financial Times, 9/3/2010

Further Information can be found at:


PBI Newsletter, July/August 2013 – Keeping Deposits Safe, Local, and Working for Local Economies…with Public Banks

PBI Newsletter, July/August 2013 • • August 31, 2013

The PBI (Public Banking Institute) July/August 2013 Newsletter is here!
Sign up for the Newsletter here.

Bookmark and Share

The Detroit Bail-In Template: Fleecing Pensioners to Save the Banks

Ellen Brown • • August 6, 2013

The Detroit bankruptcy is looking suspiciously like the bail-in template originated by the G20’s Financial Stability Board in 2011, which exploded on the scene in Cyprus in 2013 and is now becoming the model globally. In Cyprus, the depositors were “bailed in” (stripped of a major portion of their deposits) to re-capitalize the banks. In Detroit, it is the municipal workers who are being bailed in, stripped of a major portion of their pensions to save the banks.

…There are other steps that need to be taken, and soon, to prevent a cascade of municipal bankruptcies. The super-priority of derivatives in bankruptcy needs to be repealed, and the protections of Glass Steagall need to be restored. While we are waiting on a very dilatory Congress, however, state and local governments might consider protecting themselves and their revenues by setting up their own banks.

Read the entire article here.

Bookmark and Share

Richmond, California, Fights Banks With First-In-The-Nation Plan using the Power of Eminent Domain

PAUL ELIAS • • August 25, 2013

When the mayor of Richmond, Calif., and a gaggle of activists and homeowners showed up at the Wells Fargo Bank headquarters in downtown San Francisco this month, they were on a mission to speak with the bank’s chief executive.

They wanted the bank to drop a lawsuit aimed at stopping Richmond’s first-in-the-nation plan to use the government’s constitutional power of eminent domain to “seize” hundreds of mortgages from Wells Fargo and other financial institutions.

Read the entire article here.

Bookmark and Share

Cutting Loose: Hungary pays off IMF debt, may eye EU exit – Russia Today news

Scott Baker • • August 26, 2013

First Iceland, and now Hungary, are now embarking on a Sovereign Money road to monetary independence. They are both telling the IMF and other international bankers from the EU that “Thanks, but no thanks for your debt money, we can make our own debt-free money.” Forces from both the far Right and progressive side of the political spectrum are coming together in throwing out the unsustainable debt-money system, which not only preaches unworkable austerity, and sequestration, but whose adherents can’t even understand the basic fact that you can’t eliminate debt in a debt-based money system without eliminating money as well, and plunging us into a deflationary depression not seen since Andrew Jackson paid off the national debt in 1836 – resulting in an even worse and longer depression than the Great Depression. What we need to do is continue necessary spending, but eliminate the debt.

Read the entire article here.

Bookmark and Share

Green Light for City-owned San Francisco Bank

Ellen Brown • • July 31, 2013

When the Occupiers took an interest in moving San Francisco’s money into a city-owned bank in 2011, it was chiefly on principle, in sympathy with the nationwide Move Your Money campaign. But recent scandals have transformed the move from a political statement into a matter of protecting the city’s deposits and reducing its debt burden. The chief roadblock to forming a municipal bank has been the concern that it was not allowed under state law, but a legal opinion issued by Deputy City Attorney Thomas J. Owen has now overcome that obstacle.

Establishing a city-owned San Francisco Bank is not a new idea. According to City Supervisor John Avalos, speaking at the Public Banking Institute conference in San Rafael in June, it has been on the table for over a decade. Recent interest was spurred by the Occupy movement, which adopted the proposal after Avalos presented it to an enthusiastic group of over 1,000 protesters outside the Bank of America building in late 2011. David Weidner, writing in The Wall Street Journal in December of that year, called it “the boldest institutional stroke yet against banks targeted by the Occupy movement.” But Weidner conceded that:

“Creating a municipal bank won’t be easy. California law forbids using taxpayer money to make private loans. That would have to be changed. Critics also argue that San Francisco could be putting taxpayer money at risk.”

The law in question was California Government Code Section 23007, which prohibits a county from “giv[ing] or loan[ing] its credit to or in aid of any person or corporation.” The section has been interpreted as barring cities and counties from establishing municipal banks. But Deputy City Attorney Thomas J. Owen has now put that issue to rest in a written memorandum dated June 21, 2013, in which he states:

“1. A court would likely conclude that Section 23007 does not cover San Francisco because the City is a chartered city and county. Similarly, a court would likely conclude that Article XVI, section 6 of the State Constitution, which limits the power of the State Legislature to give or lend the credit of cities or counties, does not apply to the City. . . . [A] court would likely then determine that neither those laws nor the general limitations on expending City funds for a municipal purpose bar the City from establishing a municipal bank.2. A court would likely conclude that the City may own stock in a municipal bank and
spend City money to support the bank’s operation, if the City appropriated funds for that purpose and the operation of the bank served a legitimate municipal purpose.”

A number of other California cities that have explored forming their own banks are also affected by this opinion. As of June 2008, 112 of California’s 478 cities are charter cities, including not only San Francisco but Los Angeles, Richmond, Oakland and Berkeley. A charter city is one governed by its own charter document rather than by local, state or national laws.

Read the entire article here.

The Leveraged Buyout of America

Ellen Brown • • August 26, 2013

In a letter to Federal Reserve Chairman Ben Bernanke dated June 27, 2013, US Representative Alan Grayson and three co-signers expressed concern about the expansion of large banks into what have traditionally been non-financial commercial spheres. Specifically:

[W]e are concerned about how large banks have recently expanded their businesses into such fields as electric power production, oil refining and distribution, owning and operating of public assets such as ports and airports, and even uranium mining.

After listing some disturbing examples, they observed:

According to legal scholar Saule Omarova, over the past five years, there has been a “quiet transformation of U.S. financial holding companies.” These financial services companies have become global merchants that seek to extract rent from any commercial or financial business activity within their reach.  They have used legal authority in Graham-Leach-Bliley to subvert the “foundational principle of separation of banking from commerce”. . . .

It seems like there is a significant macro-economic risk in having a massive entity like, say JP Morgan, both issuing credit cards and mortgages, managing municipal bond offerings, selling gasoline and electric power, running large oil tankers, trading derivatives, and owning and operating airports, in multiple countries.

A “macro” risk indeed – not just to our economy but to our democracy and our individual and national sovereignty. Giant banks are buying up our country’s infrastructure – the power and supply chains that are vital to the economy. Aren’t there rules against that? And where are the banks getting the money?

Read the entire article here.

Bookmark and Share

Truthdigger of the Week: Ellen Brown

Alexander Reed Kelly • • August 25, 2013

Every week the Truthdig editorial staff selects a Truthdigger of the Week, a group or person worthy of recognition for speaking truth to power, breaking the story or blowing the whistle. It is not a lifetime achievement award. Rather, we’re looking for newsmakers whose actions in a given week are worth celebrating.

What could happen if we took authority over banking away from Wall Street and gave it to the public? We’re told this is a bad idea—finance is too complex for common people. No doubt this is true. But as events of the last decade have shown, banking in its current form is too complicated even for Harvard-educated “financial wizards” to understand.

…The crash of 2008 demonstrated the dangers of letting the financial industry govern itself. Then the laughably inadequate regulatory response from Congress and the subsequent recovery-for-the-rich-only proved beyond a shadow of a doubt that the banking class owns all three branches of the U.S. government. That means that wherever it threatens the interests of the rich, political democracy exists in name only. As Truthdig columnist Chris Hedges has repeatedly said, somewhere along the line our government underwent a “corporate coup d’état in slow motion.” Through the genius wiles of private finance, the American government became a beneficence and protection racket for the rich.

…Many Americans grasp this instinctively, but only a small number have the training and time necessary to put together what’s happened in a way that makes even a part of the whole devious system apparent. Among them is Ellen Brown, a former civil litigation attorney who has spent much of the past decade outlining, in terms ordinary Americans can understand, the financial scheme the superrich use to plunder everyone else. Her articles appear on her website, The Web of Debt Blog, and are republished on independent websites like Truthdig and mainstream operations like The Huffington Post.

Read the entire article here.

Bookmark and Share

Money Is Not Safe In The Big Banks

Public Banking TV • • August 24, 2013

People think that money is safe in the big banks because the FDIC will protect the deposits. This assumption is not based on the facts. This video will show official government documents that describe the plans for confiscating deposits when, (not if) a big bank fails. Individual, as well as public funds from municipal, university, county deposits are at serious risk. YOUR taxpayer money will disappear in the next crisis! Public officials in charge of taxpayer funds need to be aware of the dangers here. The loss of taxpayer funds and the inability to meet payrolls and obligations will certainly prompt a response that will both immediate and forceful.

This video may be useful to present to public officials to inform them of the dangers of losing public funds under their care.


Watch the video here.

Bookmark and Share

Act Before the Bail-In: Now Is the Moment to Seize Public Banking

Rudy Avizius, • • June 15, 2013

…Most people do not understand that once you give a bank your money, the money legally is no longer yours. Under the law, you are an unsecured creditor to the bank and are treated as such in any bankruptcy proceeding. As an individual or as a public official, if you have money in one of the big banks, you have essentially given your money to that gambler and now you are a creditor to the gambler.

Read the entire article here.

Bookmark and Share

Learn How to Build Economic Democracy in Your Community…with Publicly-Owned Banks!

Margaret Flowers and Kevin Zeese • • June 15, 2013

People are realizing that they cannot make it in the current Wall Street dominated corporate capitalist economy. It is not designed for most people to make it. Rather it is designed for a small percentage to profit while everyone else is exploited and economically insecure.

A new economic model is gravely needed and has in fact taken root worldwide and increasingly in the US. People are not waiting for Congress, and are instead taking action to create the new democratized economy in many areas from finance to employment to food, energy and health care.

Two years ago, we organized the economic democracy conference of the first national Democracy Convention. More than 1,000 people attended and the energy for creating real democracy was high.

The second national Democracy Convention will take place this August 7 to 11 in Madison WI. Once again, It’s Our Economy is organizing the economic democracy conference, this time in partnership with the Public Banking Institute. Our focus this year is to bring those who have been building the new economy together to share what they are learning so that participants can put new systems in place in their own communities.

Read the entire article here.

Bookmark and Share

Victoria Grant, “Extreme Corruption, the Cause of Extreme Poverty,” at the Public Banking Conference 2013

Public Banking TV • • July 16, 2013

Victoria Grant’s presentation at PBI’s second annual Public Banking Conference, held At Dominican University, in San Rafael, CA, June 2-4, 2013.



Bookmark and Share

Videos of Speakers from PBI’s second annual Public Banking Conference, June 2-4, 2013, available!

Public Banking TV • • July 16, 2013

Videos of speakers from PBI’s second annual Public Banking Conference, held At Dominican University, in San Rafael, CA, June 2-4, 2013, NOW AVAILABLE on Public Banking TV’s channel on
























Bookmark and Share

PBI Newsletter, June 2013 – Taibbi Vanquishes Vampire Squid

PBI Newsletter, June 2013 • • June 29, 2013

The PBI (Public Banking Institute) June 2013 Newsletter is here!
Sign up for the Newsletter here.

Bookmark and Share

The Coming Monetary Revolution ‘Public Banking’

AMTV | Greenewave • • June 26, 2013


Watch the video here.

Bookmark and Share

Banking without banksters

Martin Berg • • June 27, 2013

Bravo to the Public Banking Institute for suggesting an alternative vision of what banks are and for raising a basic question: what should a bank do, and who should it serve?

I attended the Institute’s recent conference, which drew activists and interested citizens from around the country to San Rafael, California, to hear about public banking and to brainstorm about ways to fund a new economy that creates a sustainable economy for all of us, since current government officials and bankers are doing such a lousy job at it.

The varied presentations included nuts and bolts sessions on the steps involved in developing a plan and pushing for a public bank, reports on worker-owned cooperatives across the country, as well as an eye-opening session on how the government has been selling off our most gorgeous post offices, many built as part of the federal government’s robust effort to get the country back to work during the Great Depression – the Works Progress Administration.

Read the entire article here.

Bookmark and Share

Hundreds Gather for Public Banking and Economic Justice

Matt J. Stannard • • June 20, 2013

By any standards, the 2013 Public Banking Conference, held at beautiful Dominican University in San Rafael, California, was a success. In a political world where like-minded groups seldom converge on practical policy blueprints, it was an astounding success. Hundreds of committed attendees–Occupy activists, religious groups, labor, environmentalists, legal activists, journalists and progressive economists–came together for three days of heady conversations and inspiring presentations, and by all accounts, everyone left with something resembling a vision.

…“What impressed me about the conference was the very rapid growth of the public banking movement,” says Tim Canova, Professor of Law and Public Finance at NOVA Southeastern University and a strong voice for public banking. “I met activists from all corners of the country working at the local level to start public banks in their own communities. This also reflects a growing consciousness of the political importance of credit and the historical role of public banking in efforts to achieve sustainable economic development.”

Read the entire article here.

Bookmark and Share

Interview with Ellen Brown at Public Banking Conference 2013

Public Banking TV • • June 9, 2013

Ellen Brown talks about public banking can help to empower the people.

Watch the video here.

Bookmark and Share

Victoria Grant – Public Banking 2013: Funding the New Economy, June 3, 2013

Public Banking TV • • June 9, 2013


Watch the video here.

Bookmark and Share

Public Banking– A Major Answer to the Progressive Question of What to Do in the Face of Corporatization of America

Rob Kall • • June 6, 2013

I’m at the second annual conference on public banking. Last night over 600 attendees listened to Matt Taiibi, Ellen Brown, Birgitta Jonsdotter and Gar Alperovitz talk about funding the new economy.

The “new economy” means an economy that gets out from under corporatization of America, out from under corporate domination of the economy…

…Bottom line, Public banking works and is responsible for the health of some of the fastest growing nations and the only state, North Dakota, that survived the recent economic crises. Advocating for it is a progressive, bottom up approach that can produce serious democratizing effects, while at the same time taking away power and wealth from the big banks.

Read the entire article here.

Bookmark and Share

Saving Our Economy With Public Banking

Carl Gibson • • May 20, 2013

Imagine if your only choice for food came from genetically-modified crops. You might suffer regular health problems, be at a higher risk for numerous crippling diseases, and have no choice but to accept that as a fact of life. But what if, one day, you came across a farmer’s market where you could buy locally-produced, organically-grown, healthy fruits and vegetables at a fraction of the cost of GMO food. Wouldn’t you switch immediately and never go back? Your body would heal and you’d feel great.

Similarly, most U.S. states, with the exception of North Dakota (we’ll get there in a minute) have no choice but to depend on big Wall Street banks for the money necessary to build critical infrastructure, most of which comes with obscene interest rates and get-rich-quick schemes like capital appreciation loans. These are concocted by predatory bankers intending to bleed municipalities and counties dry, from Jefferson County, Ala. to Napa Valley, Calif. But public banking can be the antidote that will free us from our dependency on Wall Street and put monetary power in the people’s hands. In short, our economy would heal and we’d all feel great.

Read the entire article here.

Bookmark and Share

Michael Hudson Interview: Public Banking Needed to Stop “Cannibalization” of the Economy • March 29, 2013

Watch Michael Hudson’s interview with Paul Jay of The Real News Network.

Michael Hudson: As long as finance is left in private hands, you’re going to have austerity and America ending up looking like Greece and Ireland.

Read the transcript here.
Watch the video here.

Bookmark and Share

Wales needs to consider following the successful public banking model of North Dakota

Dr Ian Jenkins • • May 16, 2013

Plaid Cymru is proposing a Public Bank for Wales but what is public banking and is it the answer to the challenges facing the Welsh economy? Dr Ian Jenkins explores.

It is fair to say that North Dakota is not the highest-profile of the States of the Union: lying on the Canadian border between Minnesota and Montana it does not have the globally impressive multi-billion GDP of a California, a New York or a Texas and in fact has the lowest per capita GDP of any US state.

Yet North Dakota has two things that none of its more heavyweight fellow states can boast – a budget surplus for every year since the economic crisis began in 2008 and an unemployment rate of 3.3%, the lowest in the US: so they must be doing something right in the Peace Garden State.

So what makes North Dakota different from other US states, allowing it to navigate the stormy seas of recession without recourse to brutal austerity measures or suffering crippling unemployment?

Read the article here.

Bookmark and Share

Join us! June 2-4, San Rafael, CA! Two evening events plus the PBI 2013 Public Banking Conference!

Public Banking Institute •

How DO we improve the economic livelihoods of millions of people? Reclaim the “money power” with publicly-owned banks. A network of publicly-owned banks across the United States holds the promise of local abundance, sustainable productivity, and the democratization of our economy.

Join the world’s pioneering policy thinkers, interested and informed citizens, civic leaders, banking entrepreneurs, and innovators for three events:

  1. CONVERSATION. Featuring Matt Taibbi, Ellen Brown, Birgitta Jonsdotter and Gar Alperovitz. Sunday, June 2, 7-9:15pm. $35.
  2. TPP Forum. Featuring David Brodwin, Margaret Flowers, Kevin Zeese, and Georgia Kelly. Monday, June 3, 7pm. Free.
  3. PBI’s Public Banking Conference 2013: Funding the New Economy in San Rafael, CA, June 2-4. $265.

All three events will be held at Dominican University, Angelico Hall, in San Rafael, CA.

Register here.

Bookmark and Share

Bail-out Is Out, Bail-in Is In: Time for Some Publicly-Owned Banks

Ellen Brown • • April 30, 2013

“[W]ith Cyprus . . . the game itself changed. By raiding the depositors’ accounts, a major central bank has gone where they would not previously have dared. The Rubicon has been crossed.”
–Eric Sprott, Shree Kargutkar, “Caveat Depositor”

The crossing of the Rubicon into the confiscation of depositor funds was not a one-off emergency measure limited to Cyprus. Similar “bail-in” policies are now appearing in multiple countries. (See my earlier articles here.) What triggered the new rules may have been a series of game-changing events including the refusal of Iceland to bail out its banks and their depositors; Bank of America’s commingling of its ominously risky derivatives arm with its depository arm over the objections of the FDIC; and the fact that most EU banks are now insolvent. A crisis in a major nation such as Spain or Italy could lead to a chain of defaults beyond anyone’s control, and beyond the ability of federal deposit insurance schemes to reimburse depositors.

The new rules for keeping the too-big-to-fail banks alive: use creditor funds, including uninsured deposits, to recapitalize failing banks.

Read the article here.

Bookmark and Share

PBI Newsletter, April 2013: Artificial Scarcity and Public Banking

PBI Newsletter, April 2013 • • April 29, 2013

The PBI (Public Banking Institute) April 2013 Newsletter is here!
Sign up for the Newsletter here.

Bookmark and Share

The People’s Bank

Abby Rappaport • • April 1, 2013

When the financial crisis struck in 2008, nearly every state legislature was left contending with massive revenue shortfalls. Every state legislature, that is, except North Dakota’s. In 2009, while other states were slashing budgets, North Dakota enjoyed its largest surplus. All through the Great Recession, as credit dried up and middle-class Americans lost their homes, the conservative, rural state chugged along with a low foreclosure rate and abundant credit for entrepreneurs looking for loans.

Normally one of the overlooked states in flyover country, North Dakota now had the country’s attention. So did an unlikely institution partly responsible for its fiscal health: the Bank of North Dakota. Founded in 1919 by populist farmers who’d gotten tired of big banks and grain companies shortchanging them, the only state-owned bank in America has long supported community banks and helped keep credit flowing.

Read the article here.

Bookmark and Share

PBI’s Annual Public Banking Conference 2013, June 2-4, 2013, San Rafael, CA. Please join us!

Public Banking Institute •

How DO we improve the economic livelihoods of millions of people? Reclaim the “money power” with publicly-owned banks. A network of publicly-owned banks across the United States holds the promise of local abundance, sustainable productivity, and the democratization of our economy.

Join the world’s pioneering policy thinkers, interested and informed citizens, civic leaders, banking entrepreneurs, and innovators for PBI’s Public Banking Conference 2013: Funding the New Economy in San Rafael, CA, June 2-4.

Also, please note there is a special event on Sunday evening, June 2, open to the public, featuring our special guests, Matt Taibbi, Birgitta Jonsdottir, and Ellen Brown, 7-9:30pm. Tickets for this kick-off event will be sold separately.

Register here.

Bookmark and Share

Creating a Finance System That Serves the People, Part II: Remaking the Federal Reserve, Building Public Banks and Opting Out of Wall Street

Kevin Zeese and Margaret Flowers • • April 17, 2013

In Part I of this series, we examined breaking up the too-big-to-fail-or- jail banks, regulating them – especially their massive and risky derivatives trading – and more aggressively enforcing laws and regulations against security fraud.

In Part II, we examine how to remake the Federal Reserve into a transparent, democratic institution that serves the necessities of the people and the economy, not just the bankers; how to develop public banks in every state and many cities throughout the nation; and how people can opt out of Wall Street right now.

Read the entire article here.

Bookmark and Share

Before Next Crash, Create Finance System That Serves Public, Part I: Shrink, Regulate Banks, and Enforce Law

Kevin Zeese and Margaret Flowers • • April 10, 2013

Big finance – the too-big-to-jail banks that dominate the economy and government – is designed for financiers and does not benefit most people. That is why many are in rebellion against the looting class of Wall Street. But if we don’t like Wall Street finance, what would we replace it with? What would a finance system that served and protected the people look like?

It is time to put together a new kind of financial system. Since the crash of 2008, not only do fraud and high-risk investments continue with little regulation and lax enforcement, but policies that protect people have weakened. Experts predict that another collapse of the big banks is very possible. In our fragile economy, another crash could have devastating consequences.

The ideas we put forward in this series of articles are not final, but are a work in progress. In part I, we focus on approaches to regulation and breaking up the too-big-to-fail banks, as well as on the risk that derivatives pose to depositors. In part II, we will discuss the Federal Reserve, public banks, and ways to opt out of Wall Street now.

Read the entire article here.

Bookmark and Share

Britain’s Post Office to offer current (bank) accounts • April 10, 2013

The Post Office is to offer current accounts in the UK, following a regulator’s claim that the market offers little choice for consumers.

The new account, provided by Bank of Ireland, will be available in some areas in the coming weeks before a wider launch next year.

Few details have been released about the characteristics of the current account at this stage.

In January, a regulator said the market was dominated by a few providers.

The Office of Fair Trading (OFT) said that Lloyds, RBS, Barclays and HSBC held 75% of the market.

This led to a “lack of dynamism” from the banks, it said, together with a lack of choice for customers, meaning they were unlikely to switch to a different bank.

The Post Office, which has 11,500 branches, already offers a range of financial products in a link with Bank of Ireland.

Some three million Post Office customers already use products such as savings accounts, mortgages and insurance policies.

Read the entire article here.

Bookmark and Share

It Can Happen Here: The Confiscation Scheme Planned for US and UK Depositors

Ellen Brown • • April 3, 2013

Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few eurozone troika officials scrambling to salvage their balance sheets. A joint paper by the U.S. Federal Deposit Insurance Corporation (FDIC) and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds. New Zealand has a similar directive, discussed earlier here.

Read the entire article here.

Bookmark and Share

School districts pay dearly for bonds…ANOTHER reason for publicly-owned banks!

Trey Bundy and Shane Shifflett, California Watch • • January 31, 2013

The Napa Valley Unified School District had a quandary: The district needed a new high school in American Canyon, but taxpayers appeared unwilling to take the financial hit required to build it.

So in 2009, the district took out an unusual loan: $22 million with no payments due for 21 years. By 2049, when the debt is paid, it will have cost taxpayers $154 million - seven times the amount borrowed.

…This form of borrowing has created billions of dollars in debt for taxpayers and hundreds of millions of dollars in revenue for financial advisers and underwriters. Voters are usually unaware of the bonds’ high interest. At least one state, Michigan, has banned their use.

Read the entire article here.

Bookmark and Share

PBI Newsletter, March 2013: TPP and Public Banks, Cyprus, Letter from a Vermont Farmer, and more…

PBI Newsletter, March 2013 • • March 29, 2013

The PBI (Public Banking Institute) March 2013 Newsletter is here!
Sign up for the Newsletter here.

Bookmark and Share

Yes, We Can Have Banks That Work For the People

Richard (RJ) Eskow • • March 28, 2013

We all know the banking system is broken. It’s easy to become pessimistic in the face of corporate and political corruption, but the system can be changed. We’ve done it before, and we can do it again.

One pathway to genuine reform is “public banking”: the establishment of banks which are owned at operated by the government, and which serve people and small businesses directly. Here’s why public banking should be included in the agenda for deep and genuine financial reform.

Read the entire article here.

Bookmark and Share

Understanding Money by John H. Hotson

John H. Hotson • PCDForum Article #15 • June 1, 1996

An understanding of the true nature of money is essential for those seeking economic reforms toward the creation of sustainable societies…

…Governments got into this mess by violating four common sense rules regarding their fiscal and monetary policies. These rules are:

1. No sovereign government should ever, under any circumstances, give over democratic control of its money supply to bankers.

2. No sovereign government should ever, under any circumstances, borrow any money from any private bank.

3. No national, provincial, or local government should borrow foreign money to increase purchases abroad when there is excessive domestic unemployment.

4. Governments, like businesses, should distinguish between “capital” and “current” expenditures, and when it is prudent to do so, finance capital improvements with money the government has created for itself.

Read the entire article here.

Bookmark and Share

Richard Werner: Local Banks – Their Vital Role

Charles Bazlinton • • May 20, 2011

“…Banks, in all countries at the moment, have been given the PRIVILEGE to creating the money supply, and allocate the money as they see fit.”

In the UK the Coalition Government has for some time been pleading the banks to lend to small and medium-sized businesses – with the aim of kick-starting economic growth. But it has not worked. In this video interview Professor Werner shows how this failure is particular to the UK due to the size of the banks. There is a mismatch. These huge centralised international banks are not suited for lending to local and regonal businesses. This means that small local businesses are throttled and the shape of the economy is skewed in favour of large firms. A Government committed to localism and the participation of all under its Big Society banner should heed Dr Werner’s clear agenda of what should be done now to provide Banking for the BIg Society.


Watch the video here.

Bookmark and Share

A Safe and a Shotgun or Public Sector Banks? The Battle of Cyprus

Ellen Brown • • March 22, 2013

On Tuesday, March 19, the national legislature of Cyprus overwhelmingly rejected a proposed levy on bank deposits as a condition for a European bailout. Reuters called it “a stunning setback for the 17-nation currency bloc,” but it was a stunning victory for democracy. As Reuters quoted one 65-year-old pensioner, “The voice of the people was heard.”

…The move was bold, but the battle isn’t over yet. The EU has now given Cyprus until Monday to raise the billions of euros it needs to clinch an international bailout or face the threatened collapse of its financial system and likely exit from the euro currency zone.

…The deal pushed by the “troika” – the EU, ECB and IMF – has been characterized as a one-off event devised as an emergency measure in this one extreme case. But the confiscation plan has long been in the making, and it isn’t limited to Cyprus.

Read the article here.

Bookmark and Share

North Carolina’s State Senator’s bill SB150 to study state-run bank considered long shot

Deon Roberts • • March 19, 2013

In a state that’s a hub for banking, an N.C. senator is sponsoring a bill that even she admits has little chance of passage. Her measure calls for a study of a potential state-owned bank.

Eleanor Kinnaird, a Chapel Hill Democrat who says she has “very little love for this industry,” is the primary – and so far only – sponsor for Senate Bill 150, which calls for the creation of a commission to study the impact of a state-owned bank that would receive deposits of state funds.

If Kinnaird is successful, North Carolina would become the second state to have a state-owned bank. The only state with one is North Dakota.

Kinnaird’s bill doesn’t call for the creation of a state-run bank – only a study on the issue – but if such a bank were created, public dollars that state agencies now deposit in privately run banks would be deposited into the state-run bank.

Read the article here.

Read the bill SB150 here.

Proposal for Maine State Bank Back on Legislative Agenda

Tim Porter • • December 10, 2012

Two lawmakers are re-introducing a bill this session to establish a Maine state bank. Rep. Diane Russell, of Portland, and fellow Democrat Bobbi Beavers, of South Berwick, are gathering support for their proposal – which envisages, not so much a retail bank where you or I can open an account, but more of a mini-central bank where state dollars are invested, rather being invested in Wall Street. This, they say, would make more credit available to small businesses.

Read the article here.

Bookmark and Share

Public Banking Institute director to speak in Thomaston March 14 • March 10, 2013

On Thursday, March 14, at 5 p.m., Marc Armstrong will present a discussion on public banking at St. John Baptist Episcopal Church, 200 Main Street, in Thomaston.

The presentation, entitled “Why deposit public money in Wall Street banks, only to have to borrow it back?, ” will guide participants through a discussion making the case that public money (tax revenues, fees) should be placed in public institutions for the benefit of the public.

Event Date:
Thu, 03/14/2013 – 5:00pm

Event Location:
St. John Baptist Episcopal Church

200 Main Street
Thomaston, Maine

Contact Phone:
(207) 354-8734

Read the article here.

Bookmark and Share


Chris Cook • • March 10, 2013

It lies at the heart of the world’s financial crisis and threatens to derail every solution we try … but the global debt problem won’t be solved by a traditional view of economics.

…THE clearing banks of course have their own power to create money, for the purposes of lending. They are responsible for most new money in the modern system, accounting for about 97% compared to 3% from the Bank of England.

They, too, are the subject of a well-peddled myth, which is that deposits are first collected by banks and then spent or loaned into circulation on the basis of requiring a certain reserve level of deposits to be maintained. In fact, there is no constraint on UK credit/money creation of reserves: the constraint on modern money creation by private banks is the capital required to cover losses on loans. Private banks first lend or spend what are essentially “lookalikes” of central bank money and then fund their dated interest-bearing loans (assets) with dated interest-bearing deposits (liabilities).

Putting most money creation into the hands of organisations whose raison d’etre is to make money from lending (and more recently, from speculation) is behind much of what has gone wrong with the financial system. As with all historic bubbles, the profit motive drove excessive credit creation.

…FROM these observations, I reach two conclusions. First, the clearing banks cannot be trusted to freely create the credit which is modern money. If money is to be created by a middleman or intermediary then it should be either the central bank or the Treasury itself.

…MY second conclusion is that we must revisit the concept of the national debt itself and recognise it for the national equity it is in reality. We have only saddled ourselves with this debt delusion because we have forgotten what the true relationship actually is between public spending and taxation.

Read the article here.

Bookmark and Share

Quantitative Easing for the People: Default on the Public Debt, Nationalize the Banks, and a Dividend for Citizens

Ellen Brown • • March 7, 2013

Comedian Beppe Grillo was surprised himself when his Five Star Movement got 8.7 million votes in the Italian general election of February 24-25th. His movement is now the biggest single party in the chamber of deputies, says The Guardian, which makes him “a kingmaker in a hung parliament.”

Grillo’s is the party of “no.” In a candidacy based on satire, he organized an annual “V Day Celebration,” the “V” standing for vaffanculo (“f—k off”). He rejects the status quo—all the existing parties and their monopoly control of politics, jobs, and financing—and seeks a referendum on all international treaties, including NATO membership, free trade agreements and the Euro.

…Steve Colatrella, who lives in Italy and also has an article in Counterpunch on the Grillo phenomenon, has a different take on the surprise win. He says Grillo does have a platform of positive proposals. Besides rejecting all the existing parties and treaties, Grillo’s program includes the following:

• unilateral default on the public debt;
• nationalization of the banks; and
• a guaranteed “citizenship” income of 1000 euros a month.

It is a platform that could actually work. Austerity has been tested for a decade in the Eurozone and has failed, while the proposals in Grillo’s plan have been tested in other countries and have succeeded.

Read the article here.

Bookmark and Share

State-Owned Banks made it to the website of the NCSL (National Conference of State Legislation) • January 16, 2013

State-Owned Financial Institutions 2012 Legislation

Last Updated: Jan. 16, 2013

NCSL Staff Contact: Heather Morton, 303.364.7700 (Denver)

With the struggling economy, state legislators are investigating state-owned banks, similar to the Bank of North Dakota, as a way to encourage economic development and generate revenue. This kind of institution is also known as a public or partnership bank. The Bank of North Dakota, formed in 1919 by the North Dakota Legislative Assembly, is the only state-owned bank operating in the United States. The legislation list below does not include information on infrastructure banks, as they are separate entites from state-owned banks.

In the 2012 legislative session, 20 bills and resolutions were pending in 15 states to study the issue or to create a state bank or investment trust.

Related NCSL Webpages:

NCSL LegisBrief: Are State-Owned Banks a Viable Option?

2011 Legislation
2010 Legislation

Read the webpage here.

Bookmark and Share

PBI’s Annual Public Banking Conference 2013, June 2-4, 2013, San Rafael, CA. Please join us!

Public Banking Institute • • February 11, 2013

How DO we improve the economic livelihoods of millions of people? Reclaim the “money power” with publicly-owned banks. A network of publicly-owned banks across the United States holds the promise of local abundance, sustainable productivity, and the democratization of our economy.

Join the world’s pioneering policy thinkers, interested and informed citizens, civic leaders, banking entrepreneurs, and innovators for PBI’s Public Banking Conference 2013: Funding the New Economy in San Rafael, CA, June 2-4.

Also, please note there is a special event on Sunday evening, June 2, open to the public, featuring our special guests, Matt Taibbi, Birgitta Jonsdottir, and Ellen Brown, 7-9:30pm. Tickets for this kick-off event will be sold separately.

Register here.

Bookmark and Share

PBI News Alert: Matt Taibbi, Public Banking Conference 2013, June 2-4, 2013, Promo code & more…

PBI News Alert • • February 8, 2013

How often do you get a chance to join with other creative minds discussing how best to redesign the banking systems of nations, in ways that would create new prosperity for millions and help to rebuild local economies? This year, just once.

Read the entire PBI News Alert here.

Bookmark and Share

A breakthrough speech on monetary policy…that governments should create money and distribute it directly to citizens.

Anatole Kaletsky • • Februrary 7, 2013

Wednesday night may have marked the “emperor’s new clothes” moment of the Great Recession, in which the world suddenly realizes its rulers are suffering from a delusion that doesn’t have to be humored. That delusion today is economic fatalism: the idea that nothing can be done to break the paralysis in the global economy and therefore that a “new normal” of mass unemployment and declining living standards is inevitable for years or decades to come.

That such economic fatalism is nonsensical is the key message of a truly historic speech delivered on Wednesday by Adair Turner, chairman of Britain’s Financial Services Authority and one of the most influential financial policymakers in the world. Turner argues that a virtually surefire method of stimulating economic activity exists today and that politicians and central bankers can no longer treat it as taboo: Newly created money should be handed out to the citizens or governments of countries that are mired in stagnation and such monetary financing of tax cuts or government spending should continue until economic activity revives.

Read the article here.

Bookmark and Share

Should Banks be a Public Utility? Yes.

The Real News • TheRealNews @ • October 11, 2011

Leo Panitch: The OWS movement should adopt the demand for banking in the public interest which challenges the system.


Read the article and transcript here.
See the video here.

Bookmark and Share

Olafur Ragnar Grimsson Iceland President ‘Let banks go bankrupt’ • January 25, 2013

Iceland President Olafur Ragnar Grimsson tells Al Jazeera’s Stephen Cole that Europe should let banks that are ran “irresponsibly” go bankrupt. Speaking at the annual World Economic Forum in Davos, Grimsson also held his country as a model of economic recovery after its near-collapse four years ago. “We didn’t follow the traditional prevailing orthodoxies. And the end result four years later is that Iceland is enjoying progress and recovery.”


See the video here.

Bookmark and Share

School districts pay dearly for bonds…A MAJOR reason for state-owned banks!

The Real News • TheRealNews @ • January 26, 2013

The Napa Valley Unified School District had a quandary: The district needed a new high school in American Canyon, but taxpayers appeared unwilling to take the financial hit required to build it.

So in 2009, the district took out an unusual loan: $22 million with no payments due for 21 years. By 2049, when the debt is paid, it will have cost taxpayers $154 million – seven times the amount borrowed.

…In California, where rules governing the loans are among the loosest, more than 400 school districts and other agencies have racked up greater capital appreciation bond debt in the past six years than agencies in any other state.

They have borrowed $9 billion that will cost taxpayers $36 billion to repay over the next 40 years, according to data compiled by California Treasurer Bill Lockyer. He called it “debt for the next generation.”

Read the article here.

Bookmark and Share

Get every new post delivered to your Inbox.

Join 202 other followers