Public Banking – A Proven Model

Globally, twenty-five percent of banks are publicly owned. They contribute to financial stability and economic success in China, Japan, Germany, Canada, Australia, India, and many other countries.

In the US for the last century, we have had only one publicly-owned depository bank – the Bank of North Dakota – but its stellar record has shown what public banking can do for local economies. It was recently joined in 2018 by another public bank in American Samoa: the Territorial Bank of American Samoa.

Other public banks with stellar records include the 200-year-old German public banks, which have been largely responsible for Germany’s revolution in renewable energy and its thriving economy; and China’s giant state-owned banks, which have funded massive infrastructure projects not only in China but in Southeast Asia and Africa.

The Bank of North Dakota

By law, all money held by North Dakota is deposited in the Bank of North Dakota. Among other advantages, the Bank of North Dakota can partner with private community banks to increase their power to lend.

The Bank of North Dakota pays the profits generated by lending to its only shareholder — the people of North Dakota, as represented by their state government. Despite its small population and modest volume of economic activity, the Bank of North Dakota returned more than$600 million to the state’s general fund in recent years. The Bank of North Dakota helps the state achieve budget surpluses and eliminate the need for drastic tax increases or spending cuts for vital public services.

The BND story is here.

AUDIO: In this roundtable discussion, North Dakota community bankers describe how they view the Bank of North Dakota as an ally and partner central to the success of their banks, and Bank of North Dakota CEO Eric Hardmeyer explains his views of the Bank of North Dakota’s mission.

Territorial Bank of American Samoa

In April 2018, the Federal Reserve allowed the Territorial Bank of American Samoa access to the U.S. payments system, nearly two years after the bank first applied. The decision is a boon to the remote U.S. territory in the South Pacific, where more than half of the households are at, near, or below the federal poverty level. Officials across the seven islands that comprise American Samoa had been scrambling for a way to maintain local banking services since the Bank of Hawaii announced in 2012 it was leaving the territory. [Reference]

The Territorial Bank of American Samoa is designed to serve as a a fully functioning financial institution, providing a range of products and services including savings and checking accounts, ATM services, debit cards, consumer and business loans and lines of credit and other services typically provided by banks. With the phrase “The People’s Bank” or “Faletupe o le Atunu’u”, the Bank will operate under a team of locally seasoned banking professionals and experienced U.S. banking management. With the creation of TBAS, consumers and businesses of the territory will be guaranteed a choice in financial services. The TBAS website is here.

Public Banks in Germany, China, Canada, Australia

The Bank of North Dakota is just one of many public banking models around the world. For most of the twentieth century in Australia, the publicly-owned Commonwealth Bank of Australia was both the nation’s central bank and a commercial bank, “keeping the other banks honest” by competing with them. In the Canadian province of Alberta, the publicly-owned Alberta Treasury Branches connect nearly every town in a shared credit system. Public banks work successfully with private banks in many countries, including Switzerland, Germany, India, China and Brazil.

Bank of North Dakota
Territorial Bank of American Samoa
Territorial Bank of American Samoa
Commonwealth Bank of Australia
Alberta Treasury Bank
Sparkasse Bank