A Government junior minister has said it is time to consider a pilot public banking project because of the lack of proper competition in the banking sector following the decisions of KBC and Ulster Bank to exit the Irish market.
Green Party Minister of State for Land Use and Biodiversity Pippa Hackett said that "as it is clear that private banking is not serving us well it is time to reconsider our options".
Ms Hackett, who is also a Senator, said a pilot public bank first suggested in a 2018 government-commissioned report should be considered.
The Local Public Banking in Ireland report in question had examined the possibility of piloting a public bank in the midlands.
Ms Hackett told the Seanad the report suggested the pilot public bank "should be headquartered in Mullingar, with branches in Tullamore, Portlaoise, Athlone and Longford. We should consider such a pilot."
A banking forum has already been proposed amid the current situation, and Ms Hackett said public banking should be part of that discussion.
Minister of State for Finance Seán Fleming has already said his department supported such a forum, but suggested that rather than participating in it the department would act on the forum’s conclusions.
Public banking has been a policy of the Green Party for a long time, Ms Hackett said. In 2019 the Indecon report on public banking said that “there was no need for a public bank because the level of competition in the Irish market was so strong. This, however, is clearly not the case anymore,” Ms Hackett said.
She added that public banks keep money in a community. “What is generated there stays there and is pumped back into new ventures or expansions,” she said, noting that public banking successfully operates in 21 EU member states.
The Minister of State said public banking allows for greater financial inclusion, and this has been linked to stronger and more sustainable economic growth. She added that while credit unions do this to an extent, they are limited in their ability to function as banks and An Post, which offers some financial services, is similarly limited.
“A full public banking system could remove the barriers to microbusinesses, which are often turned down for credit,” she said, adding that such businesses included hairdressers and cafes.
Broadening debate
Fianna Fáil Senator Malcolm Byrne said he supported a full debate on banking but warned that it had to be much broader than the "traditional players".
He said that if it was just the traditional players involved “it will be like getting horse and cart owners to debate how we make horses go faster while the motor car is being developed at the same time”.
Mr Byrne said it was essential to have consumers involved in such discussions, adding that “teenagers and those in their 20s have a greater idea around where the financial markets are and where the products are going”.
He also said the Central Bank had to be given specific statutory responsibility for promoting competition across the financial services market.
Seanad leader Regina Doherty supported the call for a banking forum but was concerned that "we tend to talk ourselves to death in this country" and what is needed is action.
“We do not need another 12 or 24 months of navel-gazing and talking to ourselves about what needs to be done. We all know what needs to be done, which is that serious competition, even if it is by the State, must be introduced into this marketplace.”
