Public Banking FAQs

How are public banks different from private banks?

  • Public banks differ from private banks in two respects. First, public banks are owned by a public institution, specifically a form of government. Second, public banks operate on a nonprofit basis, meaning that the surplus generated from the bank is either invested back into its operations or used to fund a resource that is considered a common good. Table 1 describes the difference between banking models.


Banking Models



Profit Status



Private Banks



Based on shares or ownership


Mutual Banks

Collective Private


Based on ownership, but all owners have equal shares


Credit Unions

Collective Private


Based on membership


Public Banks



Based on political institution; in a democracy, it means based on voters


Table 1

Do we have public banks in the United States of America?

  • The most well-known current example of a public bank in the United States is the Bank of North Dakota, which was established in 1919 and has been a successful and profitable institution for over 100 years. Other examples include the Territorial Bank of America Samoa, which was established in 2015 and is owned by the local government of America Samoa, and nine native banks in the United States that are owned by tribal governments.

Have we had public banks in America’s past?

  • Public banks have existed throughout American history. During the colonial era, Pennsylvania, Massachusetts, and New Jersey all established “land banks,” which were state owned public banks that issued mortgages for land. Following the country’s independence, many states had their own public banks well into the 19th century, including Alabama, Kentucky, Illinois, Vermont, Georgia, Tennessee, and South Carolina. Additionally, the federal government often resorted to public banking to pull the nation out of a major crisis or depression. In the aftermath of the revolution, under the direction of Alexander Hamilton, the federal government charted the First Bank of the United States. Following the devastation caused by the War of 1812, the federal government charted the Second Bank of the United States. To pay for the Civil War, Abraham Lincoln, with the guidance of Salmon P. Chase, encouraged Congress to create “greenbacks,” which were interest free banknotes that could be redeemed on demand. After a series of abrupt economic downturns, populists and progressives convinced Congress to create the United States Postal Saving System (USPSS) in 1911. The USPSS provided basic banking services through America’s post offices until 1967. During the Great Depression, President Hoover oversaw the creation of the Reconstruction Finance Corporation (RFC). Under Roosevelt’s New Deal, the RFC was greatly expanded; it offered low interest loans for infrastructure projects throughout the United States until 1954 and was instrumental in transforming America’s economy during the Second World War.

What is the relationship between public banks and community banks, credit unions, and community development financial institutions (CDFIs)?

  • The Bank of North Dakota has a healthy relationship with the state’s local community banks, credit unions, and CDFIs. It often partners with them with loans, buys their loans, or provides them with capital at a better rate than what they would find in the private market. Because of this, as Table 2 reveals, North Dakota has more banks per capita than any other state in the country.

Chartered Commercial Banks and Credit Unions Per Population, 2023



Number of Credit Unions

Number of Commercial Banks

Commercial Banks and Credit Unions Per Population

United States










North Dakota





Table 2


Why do we need a public bank in Washington?

  • Washington state is facing numerous crises. We need to repair our infrastructure, invest in clean energy, climb out of our housing shortage, protect our rural areas, and ensure the long-term health of our local businesses, particularly the cannabis industry. Not only will paying for these public goods require historic investments, but we must do so in a manner that does not contribute to more debt or make the state’s regressive tax system worse. A simple solution is for the state to charter a public bank and fund these needed areas through low-interest loans. If we did so, we would be able to ensure the economic prosperity for future generations, along with building a powerful policy tool to smooth out dramatic swings in the business cycle and protect the state against recessions and inflation.

Has there been attempts to create a public bank in Washington before?

  • Public banking legislation has been regularly introduced in the Washington State Legislature. The table below is a comprehensive list, along with their progress.

    History of Public Banking Legislation



    Passed Senate

    Passed House

    Governor Signed









































    Table 3

Is a public bank prohibited by the Washington State Constitution?

  • No. There is nothing explicit in the Washington State Constitution that prohibits public banking. Article VIII of the Washington State Constitution does prevent governments from making “gifts of public funds,” which means that governments cannot use public funds to privilege a private business or individual unless it is for an essential public service or to the benefit of the poor and infirm. However, there are multiple ways to establish a public bank in the state, and many forms do not require direct funding by the government.

How can I get involved in the public banking movement?

  • There are many things you can do. You can donate to Washingtonians for Public Banking. Sign-up for our newsletter. Invite someone from our group to speak to an organization you are affiliated with. You can encourage your local governments, such as municipalities, county councils, and school boards, to pass resolutions in support of public banking. And, most importantly, you can contact your elected representatives and encourage them to pass public banking legislation.