In 1919, North Dakota officials created the Bank of North Dakota (BND), the nation’s only state-owned bank. The bank initially fulfilled farmers’ unmet financing needs. Its role in the state economy evolved over time. During the financial crisis and Great Recession of 2007-09, the BND provided liquidity assistance to other North Dakota banks, limiting their need to draw on emergency funding from the federal government. The action generated significant interest in public banking among policy makers, and since then, legislation to establish or study state-owned banks has appeared in at least nine states.
The New England Public Policy Center (NEPPC), a research unit at the Federal Reserve Bank of Boston, recently released a report on public banking for the Massachusetts legislature (one of the aforementioned nine). While the report emphasizes Massachusetts, its findings are applicable to all states contemplating a state-owned bank.