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A regional co-operative development bank for Wales?

August 21, 2018

John McDonnell, in his 2016 speech about socialist economic policy, said, “For too long major decisions about what and where to invest have been taken by Whitehall and the City. The result has been underinvestment and decline across the country. It’s time for our regions and localities to take back control. So we will create new institutions”.

A Labour government would set up a £250billion National Investment Bank to supply the long-term, patient finance needed to sustain a new, more productive economy. It will be backed up by a network of regional development banks, with a clear public mandate to supply finance to regional and local economies. They will have a mandate to provide the patient, long-term investment needed.

The Co-operative and Community Benefit Society Act (2014) allowed co-operatives to hold a deposit-taking licence for the first time, clearing the way for full service high-street retail banks to be owned by their customers.

Tony Greenham, who promotes the creation of regional co-operative banks writes: “In response, the Community Savings Bank Association was established in 2015. Its purpose is to help set up a network of 18 regional co-operative banks across the UK with a mission to serve all people on equal terms and to focus on honest and transparent savings, loans and banking services for SMEs, community groups and households of ordinary means. By providing the back office functions and regulatory frameworks to operate a bank – a ‘bank in a box’ – this model allows smaller regional banks to stay close to their customers while also enjoying the cost efficiency advantages of national scale. The banks will be controlled by their customers, one member one vote”.

Mr Greenham is working with similar projects in London and Bristol. In Greater London, two local authorities have put up £10 million towards the £20 million needed to get a co-operative bank licence.

Ellen Brown, in an earlier post on this site, reminds us that there are over 50 similar initiatives taking place all over the USA, from Maine to Hawaii and Alaska, involving citizens, civic leaders  and elected officials, bankers and stakeholders from all walks of life who want to break the chain of dependence on mainstream banks and then looks further afield, writing:

“Greater access to finance for Welsh businesses has long been a key political issue. Brexit has both added to the need and opened new possibilities”.

After years of discussion, Welsh Labour and Plaid Cymru have finally agreed on a compact which includes a commitment to establish a development bank focused on finance for small and medium-sized enterprises (SMEs), to be formalized in the Fifth National Assembly. A Welsh Development Bank would target particular sectors and types of business that have difficulty getting funding, such as microbusinesses and new businesses.

Members of the Public Bank for Wales Action Group, which includes Arian Cymru, Responsible Finance, Move Your Money, WCVA, Wales Co-Op Centre and WLGA have significant experience and knowledge of other US and European models that may be particularly relevant to the Welsh project. The group had two public meetings last year with the Welsh government, including the chief economist and the local government and finance minister. A public meeting in Cardiff in January last year led to the first commissioned report on a Public Bank for Wales and the Public Bank for Wales Action Group is in dialogue with the Welsh government about commissioning a more detailed report.

Ellen points out that the US state-owned Bank of North Dakota (BND) and the German community-owned Sparkassen banks, have been remarkably successful. She writes: “One key to their success is that rather than simply lending their capital as a revolving fund or development agency does, they can leverage their capital into roughly ten times that sum in loans. This is something all banks can do – but only if they take deposits”.

If Labour’s National Development Bank comes into being, a Welsh regional co-op bank could be one of the network of twelve regional development banks under a Labour government, with a clear public mandate to supply finance to regional and local economies.






In November Los Angeles will choose whether to set up a public bank with a mandate to serve the people

July 31, 2018

Voters in LA will be the first in the United States to choose whether to set up their city’s own public bank to serve the people, instead of private interests.

LA’s charter currently prohibits the creation of industrial or commercial enterprises by the city without voter approval. The City Council voted on June 29th to put a measure on the November ballot that would allow the city to form its own socially and environmentally responsible, state-chartered public bank.

Public Bank LA banner

Public Banking Institute Chair Ellen Brown reported on this in a recent article:

The [Los Angeles] bank is expected to:

  • save the city millions, if not billions, of dollars in Wall Street fees and interest paid to bondholders,
  • inject new money into the local economy,
  • generate jobs
  • expanding the tax base,
  • reinvest in low-income housing,
  • critical infrastructure projects
  • and clean energy.

The City of Los Angeles paid over $109 million in fees and interests to commercial banks in 2016.  With a city-owned bank, our revenues will stay within our city. By cutting out Wall Street as the middle man, banking profit will be reinvested back into our communities.


Public Bank LA writes:

“Imagine a City Public Bank revolution where every major city has its own public bank with a social and environmental charter, explicitly designed to serve the needs of the local community” and ends:

“It’s time for our banking system to evolve into publicly-owned financial institutions prioritizing people and planet over profit”.





Climate change should be placed “front and centre” of the central bank’s mandate to boost green investment

July 12, 2018

A Green Bank of England, Central Banking for a Low-Carbon Economy


Delphine Strauss (Financial Times) summarises advice in this report (link to pdf above) from the campaign group Positive Money.

It recommends that climate change be placed “front and centre” of the Bank of England’s mandate so that the central bank can boost green investment.

The report has won backing from Lord Deben, who chairs the independent Committee on Climate Change which was set up by the government to monitor the UK’s progress in meeting its statutory targets for cutting emissions:

“They are right to seek some radical measures, because the issues are radical. I think that monetary policy does need to reflect these risks”, he said, adding that central banks should do more to ensure the availability of green finance and divest from fossil fuel companies that showed no inclination to change their business.

The BoE has been reviewing UK insurers and banks’ exposure to climate-related risks and supports efforts to develop international standards for voluntary disclosure.

Mark Carney, the BoE’s governor, has repeatedly warned of the physical damage climate change could wreak on the economy and the risks to financial stability that might result from a sudden revaluation of carbon-intensive assets.

Positive Money argued that this concern for financial stability will look “incoherent” unless the BoE does more to boost investment in the transition to a low-carbon economy. Its report urged the government to rewrite the mandate of the Monetary Policy Committee to include green objectives explicitly and called on the BoE to look at ways to build climate-related risks into its macroeconomic models.

The Positive Money report urges the BoE to set an example:

  • by disclosing the carbon risks of assets on its own balance sheet
  • by ending the practice of buying bonds issued by fossil fuel companies
  • and by financing green projects via quantitative easing during any recession.

It argued that the BoE has unintentionally promoted high-carbon sectors because its criteria for asset purchases favoured the bonds of large fossil fuel companies.




Switzerland’s Vollgeld initiative: inspired by Joseph Huber and James Robertson, backed by Martin Wolf

June 8, 2018

Quartz magazine and many other media outlets report that Switzerland votes in its “sovereign money” referendum on Sunday to decide whether banks will be prohibited from lending more money than they have in deposits, meaning only the central bank will be allowed to “create” new money.

At the 2014 launch of the Vollgeld Initiative, in the Media Center Bern, Switzerland, Hans Ruedi Weber, president of the NGO Monetary Modernization said:

Just over six years ago, at the height of the crisis in 2007/08, the book “Creating New Money” by Joseph Huber and James Robertson (pdf here) was translated into German. At that time we decided to start a sovereign money (Vollgeld) initiative in Switzerland”. 

By November the “Vollgeld Initiative” had successfully managed to collect 100,000 signatures – the number required to trigger a nationwide referendum on the issue.

Switzerland’s Vollgeld Initiative is backed by Martin Wolf. He explains that to make the system safer, banks would be stripped of the power to create money, by turning their liquid deposits into “state” or “sovereign” money. He writes:

“The proposal raises questions about the purposes to which the new sovereign money might be used. The obvious possibility is to use the money to finance the government. This idea is highly objectionable to some: it would surely create big challenges.

“Yet those challenges are nothing like as fundamental as was transferring responsibility for a core attribute of the state — the creation of sound money — to a favoured set of profit-seeking private businesses, co-ordinated by a price-setting government institution, the central bank.

“In no other economic area is public power so mixed with private interests. Familiarity with this arrangement cannot make it less undesirable. Nor can familiarity with its performance”.

Wolf states the advantage of the Vollgeld proposal: “It is a credible experiment in the direction of separating the safety rightly demanded of money from the risk-bearing expected of private banks. With money unambiguously safe, it would be far easier to let risk-taking institutions bear the full consequences of their failures”.  He ends:

“The Vollgeld proposal could provide an illuminating test of a better possible future for what has long been the world’s most perilous industry.


“May the Swiss dare”.






Thomas Attwood would have saluted the creation of the second American public bank

June 1, 2018

American Samoa is creating the second public bank in the United States. The Federal Reserve is allowing the Territorial Bank of American Samoa access to the U.S. payments system nearly two years after the bank first applied.

Federal funds and public assistance will be deposited in the bank and business loans will be provided to the small-business community.

The Territorial Bank opened its doors in October 2016 but lacked access to the payments system which enables transaction to take place with other U.S. institutions and offer traditional amenities to customers, such as cheques, debit and credit cards.

American Samoa is a U.S. territory covering 7 South Pacific islands and atolls. It has its own democratically elected legislature and governor, but all laws must be approved by the U.S. president, who retains the power to dissolve the legislature. Its people are not American citizens, but American nationals, with the right to live and work in the states.

Officials across the seven islands have been seeking a way to maintain local banking services since the Bank of Hawaii announced in 2012 it was leaving the territory. Only the Australian bank ANZ remained in the territory but its profits leave Guam and it has given no help to develop the territory’s economy.

The other American public bank – a model?

States like New Jersey and cities like Seattle and San Francisco are receptive to the idea of forming new public banks as a way to help the local economy.

Public-bank supporters see the Fed approval as a sign that there won’t be regulatory hurdles to the creation of additional public banks in the U.S. “It does set a precedent,” said Ellen Brown, founder and president of the Public Banking Institute, which is backing the New Jersey effort. “It definitely will add impetus.”

The model is vigorously opposed by the banking industry and conservatives, who view state-run enterprises as government intrusion in the market.






Escaping Growth Dependency: Positive Money

May 1, 2018


Positive Money campaigns for reform of the monetary system – taking away the power of private banks to create money through making loans – and instead bringing in a system of sovereign money creation in which the government creates money and spends it into the economy. 

The focus is on how the current monetary system creates high levels of public and private debt, which are only manageable if there is ecologically unsustainable economic growth.

Chapter 3 of its latest report explains how private banks create money to finance the purchase of assets, especially property, inflating the price of housing relative to earnings.

The conclusion is that high debt, in the current monetary system, is incompatible with a zero-growth or steady-state economy.

Positive Money proposes a sovereign money system involving the Treasury issuing non-interest paying bonds which are purchased by the Bank of England using money created for that purpose.  These payments would be credited to the government’s account, to be spent into the economy.  This debt-free money could reduce the amount of private and public debt, leading to a more stable economy.   

The New Economics Foundation argues that money does not arise naturally from the workings of the market but is brought into being by governments through their requirement that it be used to pay taxes.

It could therefore be constructed differently, bringing in restrictions on the amount of interest that can be charged and controlling the amount of credit that can be created for particular activities:

  • money could be directed towards investment in a zero-carbon future;
  • its creation for speculation prevented
  • and controls brought in over international capital flows.

Such reforms would enable governments to pursue socially and environmentally economic policies which would improve the human and natural environment.

Download Full Report here. 

Read Positive Money’s latest news here.





March visitors

April 4, 2018

People from 11 countries visited the site in March.

There were twice as many visitors from the USA than the next largest, UK

As often happens, more visitors are interested in articles with historical content rather than monetary reform.

Top post was about Park Attwood, Worcestershire, which opens:

Some years ago the writer visited the therapeutic centre, Park Attwood twice, with friends in need of health care. She was immensely impressed by the ambience of the place, and the excellent multi-facetted healthcare offered, which included organic food grown on the Steiner farm nearby.

Last month it occurred to her that there might be a connection with the family of Thomas Attwood. Knowing that many people visit the site for articles with an historical content, she looked further afield.