Public Banks in the Age of Financialization
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Public Banks in the Age of Financialization

A Comparative Perspective

Edited by Christoph Scherrer

This book asks the important question of whether public banks are a better alternative to profit-seeking private banks. Do public banks provide finance for development? Do they serve as stability anchors in financial markets? What kind of governance keeps public banks accountable to the public? Theoretically the book draws on the works of Minsky for the question on stability and on interpretative policy analysis for the issue of governance. It compares empirically three countries with significant public banks: Brazil, Germany, and India.
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Chapter 10: Marginalizing the German savings banks through the European Single Market

Halyna Semenyshyn

Abstract

The author addresses the questions of how and why the German public banks are threatened by the European Single Market project despite the good performance especially of the municipal savings banks during the crisis of 2008. The banking union as envisaged by the European Commission will force savings banks to abandon their own joint liability schemes in favor of a more expensive European Union scheme. This disregard for alternative banking models stems from the continuing predominance of neoclassical economic thinking within the European Commission, despite its delegitimization in the crisis of 2008 and the fact that after the privatization wave of the 1990s, the German public banks were left with few allies among the European member states. But it is also the result of the massive losses incurred in another section of German public banking, the regional state banks or the Landesbanken. Their failure to adapt to the loss of the state liability guarantee placed the whole public sector on the defensive.

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