I have written many times about the need to return to public banking options where Provinces, Municipalities, Cities and central banks use taxpayer funds to make direct infrastructure loans (as they were mandated to do in Canada between 1938 and 1974). In this way, the public purse can self-fund critical infrastructure investment in the real economy without having to borrow through private banks and waste hundreds of billions on underwriting and interest costs paid to private banks and their shareholders. See: A solution whose time is now: public banking for a historical overview of this issue.
Thanks to a reader for bringing an encouraging development in this thinking to my attention this week. The proposal is to revamp Canada Post back into a direct banking network (as it was before 1968) for Canadian families who have become increasingly de-banked and dependent on shark-style penalties, overdraft rates and payday loan outlets for their banking services over the past several years. Here are some highlights, but the whole article is worth reading. See Postal banking an investment worth delivering: McQuaig:
Indeed, for hundreds of thousands of Canadians who have no wealth to manage and really aren’t richer than they think, banks are increasingly inaccessible places.
As they’ve turned their attention to catering to the wealthy, Canada’s six big banks have shut down more than 1,700 branches across the country in recent years. In many rural communities today, you’re no more likely to see a bank than a buffalo.
This has left hundreds of thousands of Canadians without bank accounts, including many low-income city dwellers – notably young people with poor credit ratings and lack of identification – who now rely on pay-day loan companies charging annualized interest rates well above 300 per cent.
All this suggests there’s a compelling case for Canada Post to offer banking services to the public – as it did for decades until 1968. The possibility of reviving “postal banking” will be considered as part of a sweeping review of Canada Post, announced by the federal government last week.
What makes the idea of postal banking particularly compelling is that offering financial services – even without gouging customers – is a lucrative business.
