A Public Bank Option for Scotland

Scottish voters will go to the polls on September 18th to decide whether Scotland should become an independent country. As video blogger Ian R. Crane colorfully puts the issues and possibilities:

[T]he People of Scotland have an opportunity to extricate themselves from the socio-psychopathic global corporatists and the temple of outrageous and excessive abject materialism. However, it is not going to be an easy ride . . . .

If Alex Salmond and the SNP [Scottish National Party] are serious about keeping the Pound Stirling as the Currency of Scotland, there will be no independence. Likewise if Scotland embraces the Euro, Scotland will rapidly become a vassel state of the Euro-Federalists, who will asset strip the nation in the same way that, Greece, Ireland, Portugal and Spain have been stripped of their entire national wealth and much of their national identity.

To achieve true independence, Crane suggests the following, among other mandates:

  • Establish an independent Central Bank of Scotland.
  • Issue a new Scottish (Debt Free) Currency.
  • Settle any outstanding debt with new Scottish Currency.
  • Take Scotland out of the EU.
  • Take Scotland out of NATO.
  • Establish strict currency controls for the first 3 years of independence.
  • Nationalize the Scottish oil & gas industry.
  • Re-take control of the National Health Service.
  • Establish a State Employment Agency to provide work/training for all able-bodied residents.

Arguments against independence include that Scotland’s levels of public spending, which are higher than in the rest of the UK, would be difficult to sustain without raising taxes.  But that assumes the existing UK/EU investment regime.  If Scotland were to say, “We’re starting a new round based on our own assets, via our own new bank,” exciting things might be achieved. A publicly-owned bank with a mandate to serve the interests of the Scottish people could help give the newly independent country true economic sovereignty.

I wrote on that possibility in December 2012, after doing a PowerPoint on it at the Royal Society of Arts in Edinburgh. That presentation was followed by one by public sector consultant Ralph Leishman, who made the proposal concrete with facts and figures.  He suggested that the Scottish Investment Bank (SIB) be licensed as a depository bank on the model of the state-owned Bank of North Dakota. I’m reposting the bulk of that article here, in hopes of adding to the current debate.

From Revolving Fund to Credit Machine: What Scotland Could Do with Its Own Bank

The SIB is a division of Scottish Enterprise (SE), a government body that encourages economic development, enterprise, innovation and investment in business.  The SIB provides public sector funding through the Scottish Loan Fund. As noted in a September 2011 government report titled “Government Economic Strategy”:

[S]ecuring affordable finance remains a considerable challenge and further action is needed to ensure that viable businesses have access to the funding they require to grow and support jobs. The recovery is being held back by limited private sector investment – indeed, overall investment in the UK remains some 15% below pre-recession levels. Evidence shows that while many large companies have significant cash holdings or can access capital markets directly, for most Small and Medium-sized companies bank lending remains the key source of finance. Unblocking this is key to helping the recovery gain traction.

The limitation of a public loan fund is that the money can be lent only to one borrower at a time.  Invested as capital in a bank, on the other hand, public funds can be leveraged into nearly ten times that sum in loans.  Liquidity to cover the loans comes from deposits, which remain in the bank, available for the use of the depositors.  As observed by Kurt Von Mettenheim, et al., in a 2008 report titled Government Banking: New Perspectives on Sustainable Development and Social Inclusion from Europe and South America (Konrad Adenauer Foundation), at page 196:

[I]n terms of public policy, government banks can do more for less: Almost ten times more if one compares cash used as capital reserves by banks to other policies that require budgetary outflows.

In 2012, according to Leishman, the SIB had investment funds of £23.2 million from the Scottish government. Rounding this to £25 million, a public depository bank could have sufficient capital to back £250 million in loans. For deposits to cover the loans, the Scottish Government then had £125 million on deposit with private banks, earning very little or no interest.  Adding the revenues of just 14% of Scotland’s local governments would provide another £125 million, reaching the needed deposit total of £250 million.

The Model of the Bank of North Dakota

What the government could do with its own bank, following the model of the Bank of North Dakota (BND), was summarized by Alf Young in a followup article in the Scotsman. He noted that North Dakota is currently the only U.S. state to own its own depository bank.  The BND was founded in 1919 by Norwegian and other immigrants, who were determined, through their Non-Partisan League, to stop rapacious Wall Street money men foreclosing on their farms.

Young observed that all state revenues must be deposited with the BND by law.  The bank pays no bonuses, fees or commissions; does no advertising; and maintains no branches beyond the main office in Bismarck. The bank offers cheap credit lines to state and local government agencies. There are low-interest loans for designated project finance. The BND underwrites municipal bonds, funds disaster relief and supports student loans. It partners with local commercial banks to increase lending across the state and pays competitive interest rates on state deposits. For the past ten years, it has been paying a dividend to the state, with a quite small population of about 680,000, of some $30 million (£18.7 million) a year.

Young wrote:

Intriguingly, North Dakota has not suffered the way much of the rest of the US – indeed much of the western industrialised world – has, from the banking crash and credit crunch of 2008; the subsequent economic slump; and the sovereign debt crisis that has afflicted so many. With an economy based on farming and oil, it has one of the lowest unemployment rates in the US, a rising population and a state budget surplus that is expected to hit $1.6bn by next July. By then North Dakota’s legacy fund is forecast to have swollen to around $1.2bn.

With that kind of resilience, it’s little wonder that twenty American states, some of them close to bankruptcy, are at various stages of legislating to form their own state-owned banks on the North Dakota model. There’s a long-standing tradition of such institutions elsewhere too. Australia had a publicly-owned bank offering credit for infrastructure as early as 1912. New Zealand had one operating in the housing field in the 1930s. Up until 1974, the federal government in Canada borrowed from the Bank of Canada, effectively interest-free.

. . . From our western perspective, we tend to forget that, globally, around 40 per cent of banks are already publicly owned, many of them concentrated in the BRIC economies, Brazil, Russia, India and China.

Banking is not just a market good or service.  It is a vital part of societal infrastructure, which properly belongs in the public sector.  By taking banking back, local governments could regain control of that very large slice (up to 40 per cent) of every public budget that currently goes to interest charged to finance investment programs through the private sector.

Recent academic studies by von Mettenheim et al. and Andrianova et al. show that countries with high degrees of government ownership of banking have grown much faster in the last decade than countries where banking is historically concentrated in the private sector.  Government banks are also LESS corrupt and, surprisingly, have been MORE profitable in recent years than private banks.

Young wrote:

Given the massive price we have all paid for our debt-fuelled crash, surely there is scope for a more fundamental re-think about what we really want from our banks and what structures of ownership are best suited to deliver on those aspirations? . . .

As we left Thursday’s seminar, I asked another member of the audience, someone with more than thirty years’ experience as a corporate financier, whether the concept of a publicly-owned bank has any chance of getting off the ground here. “I’ve no doubt it will happen,” came the surprise response. “When I look at the way our collective addiction to debt has ballooned in my lifetime, I’d even say it’s inevitable”.

The Scots are full of surprises, and independence is in their blood.  Recall the heroic battles of William Wallace and Robert the Bruce memorialized by Hollywood in the Academy Award winning movie Braveheart.  Perhaps the Scots will blaze a trail for economic sovereignty in Europe, just as North Dakotans did in the U.S.  A publicly-owned bank could help Scotland take control of its own economic destiny, by avoiding unnecessary debt to a private banking system that has become a burden to the economy rather than a pillar in its support.


Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books, including the best-selling Web of Debt. In The Public Bank Solution, her latest book, she explores successful public banking models historically and globally. Her 200+ blog articles are at EllenBrown.com.

23 Responses

  1. A public bank for scotland is a great idea. Independence also gives Scotland the opportunity to put some real controls on corporations, especially multinationals.
    England invented globalization with the East India Company; those illicit profits still flow into the City of London, so we can never expect the British government to impose controls on their own Fat Cats.

  2. Ellen Brown for President or at least VP with Elizabeth Warrren

  3. Seeing as it was a Scot who started scam banking it should be the Scots that point the way to ending ponzi scheme banking. However, if the Scottish people are as uneducated as most peoples are to the one world banking cartel and it’s owners debt money system of perpetual financial enslavement then we can expect them to be ignorant of their plight and unfortunately vote accordingly..

  4. […] A Public Bank Option for Scotland […]

  5. Yet another country may fall to the lure of independence, as the USA did but neglect that basic fact that it must also become sovereign in the other most important way or become a vassal state to the bankers of the world….that of the necessity to issue it’s own debt-free, government printed/generated currency as did Germany right after WWI, with which it prospered greatly even with the horrid Versailles treaty in place because…THAT is how powerful debt-free money and LABOR are ! The country should be internally self-sufficient as to manufacturing and services so that it does not need other nations for trade to any great degree, and so can use it’s new money as it wishes to the “constitutional general welfare” of all it’s citizens as we should have instead of letting Hamilton ruin Ben Franklin’s debt-free money ideas that first caused our revolution (it was not mainly, “no taxation without representation” as we are ‘taught’ ). The system worked for Germany so well that they totally rebuilt all their infrastructure in only 2 years, paying the public workers “labor certificates” who then spent them into the general circulation where the economy went round and round as the asset base of the country grew…THAT is prosperity and freedom.

    • I’m not sure that you are correct in saying Germany issued its own debt free currency, even with the horrid Versailles treaty in place, right after WWI.
      It was the Treaty of Versailles that forced Germany to print far too much money to pay reparations under the terms of the treaty, that destroyed the currency and the Weimar Republic.
      Hitler restored the German economy and got rid of unemployment when he came to power.
      I would welcome anyone who can give a reference to the explanation of how Hitler achieved what he did in such a short time. It may be a blueprint for how to restore the world economy today.

      • Simple, he just learned from Grandad Salomon Rothschild – come on – Hitler was a bankster puppet too – they ALWAYS set up and control BOTH SIDES to ensure THEIR outcomes. WW2 was just a dress rehearsal for the real show.

        Hey Ellen, you juts make toooo much sense!

        Social Credit works. Period. No matter who works it – Uncle Adolph or Aunty Nel…

        Now, consider this. Scotland and Germany are relatively tight – they both go to Kirk on Sundays. The Queen Mother was a Scots/Jewess. Salmond wants to retain the Crown (est CE1111 in The City, aka Babylon). The colors of Scotland are the same as Israel. Uber Pedo Pope emiritas Benedict is ensconced in Holyrood Castle, the Queen’s Edinburgh abode. She has Ba’almoral too, and other holdings. She is Scottish/Jewish/German by ancestry and bosom buddies to the Rothschild family and cohorts. She needs somewhere to hide her enormous fortune from the slowly awakening British public, many of whom are baying for Guelf (Wolf) blood. When she says “Stay united” I think of a certain rabbit – “Don’t throw me in the Briar patch” – hmm, briars are Scottish, yes?

        IF the vote goes through, the Scottish Blue Rite will have its own country and the Guelf’s in sheep’s clothing will have a safe, convenient place to hide their wealth, and their Pedo friends too, and be far enough removed from the nuclear waste dump known as England. Their eventual bolt hole is New Zion, (NZ – Australia) but more on that later…

        No matter how it plays out, the Royals and Rothschild will be one step ahead of us all – you can guarantee that. Reacting is just not their thing, old thing, they like to be pro-active…

        You can guarantee that they have been in this from the get go and the result will not be a surprise to them, just like the US elections, yes? I would be reasonably sure that Salmond will be Blue Rite through and through.

        Don’t forget that Germany effectively took control of Blighty with the Hanover handover and the Police and Fire Brigades in Britain are basically controlled by the Blue Rite, and the Army is under the absolute command of uber mason Liz and her Chuck. The natives in Britannia are almost as dumb as those in the US, but inevitably they will wake up, but as this crew is want to do, they will simply move on and set up somewhere else – while the Northern Hemisphere burns…

        Its just an old war, not even a cold war…the retiring Gov of the bank of England said in 1999 that the new money would be in by 2015. The USD will be finished by middle of next year – and any money in banks will be gone – they will confiscate all gold and there will be a Nazi inspired pogrom world wide to eradicate the Jews, and while they are at it, let’s just get rid of those pesky Protestants too…

        In the meantime, just how much Gold has been secreted in Frankfurt under the Treaty of Maastricht? Where is all the gold from the USA? If God owns all the gold, then whoever owns all the Gold is god, yes?

        It’s the Germans Ellen, never, ever forget the Germans…who invented Communism and Capitalism (Marx and Smith had ghost writers, like Cyrus Scofield).

      • Yes Brian, Hitler at first borrowed from European bankers about $2M, but then decided that debt money was not the way to go….smart man IMO…but he used it for war materiel; imagine if he had better intentions !

  6. The YES vote in Scotland is an unprecedented phenomenon in western politics. Millions of people have been politicised as part of a grass roots movement which has rejected New Labour’s vision of a corporate UK where big business and big banks are the major beneficiaries. The YES vote is based on social justice and self governance.
    Of course, this momentum needs to be kept up post independence and I believe it will. There are difficult questions to answer. Will Scotland be a Republic? What will the constitution look like and who will be involved in writing it? It will be an exciting time. Scots are more than able to understand major economic and political problems and post independence would be the most opportune time to present these proposals which you have sketched.
    The zeitgeist of Scotland is essentially socialist (I’m not sure that most Americans would understand the concept 🙂 ) however, the idea of a national bank issuing our own currency would certainly appeal to most Scots.

    • The zeitgeist of Europe is also socialistic. Scotland would find a home across the North Sea. Also the past (John Kox) points to a relationship with The Netherlands.

  7. […] A Public Bank Option for Scotland – Ellen Brown […]

  8. Great idea Ellen. You are my unfailing hero. Let me know if you need any help down here in Los Angeles with pushing for a municipal bank.


    Tom Haberkorn

  9. I have no idea regarding Scotland. Iceland’s bank is independent. Is that correct?

  10. Ellen Brown you consistently mentally challenge and impress me.

  11. Ellen Brown is a wonderful, well informed voice regarding public banking. Hopefully, this will be seriously considered in Scotland. Perhaps senators from Massachusetts and Vermont should receive a copy of “the Public Bank Solution”.

  12. Dear Ellen,

    I applaud your fine report! A Public Bank Option for Scotland
    I am sanguine at the prospect of an independent Scotland.

    Iceland became independent from the Central Bank in 2012. Rather than limit social services they increased them, and within a few years their economy prospered.

    The other comments made here are all well and good, but for real independence Scotland must sever all dependence on the corporate economies of scale, which are “grafted” onto the Central Bank. And, the Scotts should remake their self-governance with a new Constitution and new protocols that defend them from foreign, corporate intervention, and interlopers the way the Icelanders did.

    Iceland’s new constitution (scroll down as it opens on a blank page):

    Click to access Frumvarp-enska.pdf

    Reed C. Kinney wrote: “Introduction to Section Four – Constitutional Confederation

    Community in decentralized civilization is based on a production-based economy, that operates at cost, which is composed of public cooperatives, public productive enterprises, which meet the existential needs of its people.

    Community land and Community productive facilities belong to the people – public cooperatives, public productive enterprises, are indispensable to the permanence of production-based economy. The production-based economy provides the Community’s Guaranteed Minimum Standard of Service, GMSS. DESO’s production-based economy defends human dignity. It stimulates, and finances, the ongoing development of culture, aesthetic and scientific. Simultaneously, it capitalizes the private productive enterprises of its people. ” ….

    “Sovereignty is the starting point of Freedom. Sovereignty is grounded on concrete, economic semi-self-sufficiency. Independence, as described here, naturally defends its people from malicious, external influences. And, it sees to everyone’s needs. The collaborative efforts of people in community are what safe-guards their economic stability.” (The above excerpts are from my manuscript in progress.)

    I think that in Scotland, the assets of the wealthiest one percent must be seized immediately, and invested in the needed community projects for starting local, production-based economies. Independence is not possible while the country depends on corporations’ economies of scale.


    The people must come to unanimity regarding what they prioritize for investment with public money; be that money Federal Reserve Notes or Community Autonomous Money.

    Authentic democracy does not include competing political parties. Authentic democracy is based on dialogical, consensus-based, community decision making processes, which is structurally embedded in the context of semi-self-sufficient, sovereign communities and confederations of those communities. The vital sectors of each community’s economy, essential resources and production are shared equally. Inter-community trade agreements are facilitated through confederation.

    Authentic Democracy and Sovereign Independence is contingent on confederations of real communities. Power is shared equally through decentralized civic organization, which is contingent on, resources and production, shared equally in community. These are structural challenges that can be met.

    Ellen, Keep Up Your Good Work!
    ….All of our best wishes for you and for your family.
    You be well!

    Always Yours, Reed C. Kinney

    Recommended: Native Americans Six nations:
    The Iroquois constitution:
    Iroquois Constitution:

  13. If Scotland had voted for independence and paid off all outstanding debts with a newly minted currency, those same debt holders would have ended up running the country. Murphy’s golden rule, whoever owns the gold makes the rules. Iceland essentially defaulted on it’s foreign controlled debt, allowing local currency control. If Scotland honored it’s foreign debts with the new currency nothing would change.

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