34. International Public Finance Conference
The Public Bank Resurgent: Prospects of Democratization for Sustainable DevelopmentThomas Marois
Public banks are resurgent, triggered by the failure of private finance to meaningfully confront the green transformation. But will resurgent public banks act in the public or private interest? How can progressives ensure public banks support a just green transformation? Democratization is the key. The resurgent turning point for public banks was really the UN’s 2015 Addis Ababa Action Agenda on how to finance the 2030 Sustainable Development Goals (SDGs). The international community finally acknowledged what most already knew: private finance had no appetite for saving the planet without first feeding insatiable shareholders. Ergo, high-risk, low-return green investments weren’t on the menu. The solution? For the UN, the World Bank, and the OECD it is to subordinate public finance to private interests. Public development banks should take the lead in absorbing private investors’ risks to guarantee their projected returns. There is no other way of cajoling otherwise reticent financiers to fund the global transition to a low-carbon, climate resilient future. Besides, public banks have limited financial capacity. The green transition needs the seemingly unlimited pools of global financial capital. This is the core message of the UN’s Inter-Agency Task Force 2019 Financing for Sustainable Development Report, with an important sub-text being public financial incapacity. Reinforcing existing neoliberal tropes, there is no alternative but to mobilise private finance for climate finance. The nuanced message being we now need public finance to underwrite it.