Public Banks and Public Purpose: From Pandemic Responses to Future Climate Prospects

Thomas Marois
Professor of Political Economy
Department of Political Science, and Director of the Public Banking Project
McMaster University
Canada Research Chair in Public Banking for Sustainability, Inclusion, and Prosperity

Monetary Policy Institute Blog #172

It is now acknowledged that the time of public banking has come.

In March 2025, the First Draft of the Outcome Document of the UN Fourth International Conference on Financing for Development highlights the need of Member States to ‘fully exploit the potential of national public development banks (PDBs) in mobilizing resources for sustainable development’ while calling for an intentional global ‘system of public development banks’.

Frankly, this signals unprecedented multilateral support for PDBs.

Public banks are resurgent in ways impossible to have foreseen even ten years ago. The writing was on the wall following the 2008–09 global financial crisis. Governments had nationalised failed private banks and society was now wondering what to do with them. Countries with existing public banks saw them step into the crisis, supporting small businesses, farmers, industry, government, and so on. Yet the coming wave of public banking interventions was still unforeseen.

Things began to swiftly shift with the 2015 United Nations Sustainable Development Goals and the accompanying Addis Ababa Action Agenda, which called on public development banks to play a greater role in confronting the global climate crisis.

The Covid-19 global pandemic again thrust public banks, and more specifically their financial capacity, into the limelight. Public banks responded like never before by directly supporting everything and everyone — from student loan payment deferrals to mortgage holidays to direct cash injections for micro-, small-, and medium-sized enterprises (MSMEs) to massive corporate support programmes to broad-based help for governing authorities and public services. Public banks, where they existed, played vital economic and social response roles.

It is now acknowledged that the time of public banking has come. In March 2025, the First Draft of the Outcome Document of the UN Fourth International Conference on Financing for Development highlights the need of Member States to ‘fully exploit the potential of national public development banks (PDBs) in mobilizing resources for sustainable development’ while calling for an intentional global ‘system of public development banks’. Frankly, this signals unprecedented multilateral support for PDBs.

In this promising global context, our new research Symposium on public banks and public purpose draws out the lessons of the Covid-19 global health and economic crisis for the future of public banks’ capacity to respond to climate and development finance needs.

Contributors see that there is no pathway to financing global green and just transformations that will not pass through the world’s public banks. But in whose benefit? And will sustainable development financing be at the pace, scale, and on the terms required? These remain open questions and subject to mounting power struggles.

What is clear is that public banks have to capacity to have an impact. There are 914 public banking institutions at the national and sub-national levels with total assets exceeding $55 trillion in 2024, which is an increase of $6 trillion since 2020. Of these, some 530 are specifically public development banks with $23 trillion in assets.

This is important because public financial institutions, chief among them the public development banks, have delivered more climate financing globally than all private investors combined over the last decade. In 2022, for example, private investors committed US$463 billion in climate finance while public institutions provided $730 billion (for their part, households committed $222 billion). In middle- and low-income countries 87 per cent of climate finance came from public banks and public co-financiers. Public banks are the climate finance leaders.

Yet there is nothing inherently good, or bad, about public banks. These powerful public entities are best understood as dynamic and contested institutions that are pulled between contending public and private interests. Public banks are only as good and as effective as society commands them to be, within the structural confines of global capitalism. Recurrent calls for public banks to use their resources to de-risk and to subsidize private investment is case in point. Private investors want public banks to socialise their risks and losses. Mainstream economists support this approach, despite the empirical failure of this so-called ‘blending’ agenda to deliver on sustainable, let alone just, development goals.

Three distinct messages emerge from our research Symposium on public banks, public purpose, and pandemic responses.

First, public banks can effectively and dynamically respond to crises, like Covid-19, as a matter of policy rather than profit. Yet public banks do not necessarily or automatically respond well or effectively. There is a wider political economy involved in understanding what public banks do, why they do it, with what impact, and with benefit to whom. We must be attentive to this political economy.

Second, not all ‘public purposes’ are equal. Where there are legacies of enacting pro-public interventions, these public banks tend to have more equitable and broad-based impacts. But there is evidence of public bank supports being captured for narrow political and pro-private bank and investor gains. We must be vigilant is tracking what works, what doesn’t.

Third, what public banks did during Covid-19, and the policy space that enabled it, can be learned from and scaled-up to support the future financing of global green and just development. This is a vital, forward-looking, finding.

The eight original research Symposium papers behind these messages come different academic disciplines, including economics, political economy, political science, and development studies. The authors draw on quantitative and qualitive tools to analyze and interpret public bank responses to Covid-19 and beyond. At the same time, the authors draw on the contested concept of public purpose, which offered a framework to interpret the banks’ pandemic responses. Taken together, the collection takes on a distinctly multi-disciplinary flavor.

The case studies cover both national and multilateral banks drawn from advanced and developing countries, regions, and groupings. These include Latin America, the BRICS, Europe, Argentina, Germany, Italy, Mexico, Portugal, Türkiye, and the United Kingdom.

The Symposium has direct relevance to the escalating global crisis of ensuring reliable, affordable, and climate-aligned development finance at scale and for all countries. With multilateral fora trying but not yet succeeding in solving the global climate and development finance crisis, what role is there for national and multilateral public development banks to step in and step up climate-aligned finance? Can these climate flows support socially just transitions and sustainable transformation?

Put bluntly, academics, civil society, and multilateral agencies understand that the current international financial architecture is not fit for purpose and that the hitherto market-oriented ‘business as usual’ approach to global finance for development has failed the 2030 SDGs and the global climate change agenda. Our aim was to uncover empirical evidence that could improve understanding and better inform the future prospects of public banks confronting the global crisis of climate and development finance. Our results show that public banks, guided by public purpose, offer a viable and desirable alternative to the pro-private blended finance agenda.

This Symposium does not aim to be the last word on the subject of public bank responses to Covid-19 or to the long-term global crisis of providing climate and development finance. We rather hope to encourage invigorated study of the roles of these important, contested, dynamic, and essential public financial institutions.

Public banks, potentially, can be powerful tools for public policy. Public banks can provide an essential service that, given pro-public public purposes, can be distinctly different from that offered by private banks. Given the current conjuncture and collective need for rapid and sustained action on global green and just transformations, that’s exactly what is needed.