Devin Case-Ruchala - What Are Public Banks?

What Are Public Banks?

Public banks are financial institutions financial institutions created or taken over by governments with maintained ownership or control that have long shaped how states engage with markets. Whether financing infrastructure, supporting underinvested sectors, or managing crises, governments have used these institutions to align capital with policy goals. In recent years, they have drawn renewed attention amid post-2008 crisis financial regulation, the return of industrial policy, the rise of mission-driven finance, and efforts to address complex policy challenges like climate change and energy security meeting sustainable development goals such as access to clean water (see my co-authored book chapter here).

Yet despite their contemporary relevance, the origins and evolution of public banks remain surprisingly underexplored. Existing research focuses largely on how public banks operate—especially whether they are good or bad compared to private banks—but not on when or why they are formed, due in part to a lack of conceptual clarity and data on their formation. Most contemporary definitions of ‘public banks’ focus narrowly on government ownership, while the term itself implies a broader notion of public-ness in form and function, contributing to lack of clear analysis.

In my article in Review of International Political Economy (RIPE), I address this gap, tracing the emergence of public banks from 15th-century Europe to the present—from city-state owned banks in Renaissance Italy to national development banks in Brazil and Germany, and even the state-owned commercial bank in North Dakota. To do so, I developed a new global dataset of public bank formation, focused specifically on cases where governments created or took over banks and retained control through ownership or management—what I term “government-initiated public banks”, or G-Pubs. Given the focus on government policy action, this conceptualization includes any type of bank (investment, commercial, universal, savings, etc.) where a sovereign government (national, state, or city) established control, and excludes all non-government-controlled private or nonprofit banks (including credit unions or community development banks) as well as colonial banks.

The dataset includes more than 1,300 public banks across 195 countries, spanning the period 1401 to 2021. The G-Pub dataset aims to clarify these conceptual distinctions and debates surrounding public banks, enabling a more systematic understanding of when, why, and how governments build public financial institutions. More information on the key findings of this analysis and dataset can be found here.

In the Supplementary Information, I further explore early usages of the term “public bank,” highlighting that not all institutions called “public bank” in historical texts match contemporary definitions while also helping to explain how today’s meaning emerged. While now “public bank” is associated with government ownership or control, early usages may have simply described banks operating in public spaces—at a bancus, or “bench,” in 11th-century Latin—unlike the private (closed-door) merchant banking of the time. The association with government control likely emerged gradually, as city-state authorities sanctioned the activities of certain publicly operating banks, granting them legitimacy and implicit government backing. Over time, governments began to directly establish banks under their control and for explicit public-purpose aims, a shift that may reflect the institutionalization of this earlier pattern and the blurring of the multiple meanings of “public” as spatially visible, government backed, and serving the broader “public”.

While more research is needed to trace this evolution fully, indicative archival excerpts and multilingual references are included in the Supplementary Information (Section B). Still, this preliminary evidence underscores a distinction between analyzing the phenomenon of governments establishing or taking over banks in which they retain control—yielding what are now recognized as “public banks”—and analyzing the broader set of institutions historically described as “public banks,” where the application of the term changed with political and economic circumstances.