A new public financial network is the only way to save democracy

Top-down government control can be problematic, as states can also act very undemocratically, if not in an outright authoritarian manner. In other words, public ownership is no guarantee of democracy. In addition to citizens’ wealth funds, there is a need for a new generation of public and deeply democratic banks. Here we can learn from Costa Rica’s Banco Popular. This bank, which is owned by 1.2 million Costa Rican workers, is possibly the world’s most democratic bank, with the Assembly of Workers as its highest governing body. It lives up to its mission of serving the social and sustainable welfare of the Costa Rican people by financing cooperatives and groups who tend to face financial exclusion, such as workers, peasants and small and medium-sized enterprises (SMEs). Its banking decisions are further guided by principles of gender equity, accessibility and environmental responsibility. Banco Popular works together with the regional energy cooperative, COOPELESCA, one of four that successfully electrified the rural parts of the country. With a low-cost loan, COOPELESCA fully converted to LED lighting and by 2015 the cooperative had offset its carbon footprint through its own renewable energy sources and additional environmental actions. The worker-owned bank also helped COOPELESCA to buy exhausted land to preserve soil, biodiversity and water resources. There is also much to learn from the German saving banks, or Sparkassen. The assets of these 400 local saving banks are nobody’s property. The banks are independent from local authorities, they cannot be privatized or see their profits diverted for other purposes. Each bank’s board is key to its effectiveness, as it is made up of municipal representatives and other local stakeholders whose duty is to fulfil its binding mandate to stimulate savings, promote financial inclusion and lend to SMEs. These examples of cooperative and municipal banking practices show how principles – such as a binding mandate, the involvement of a variety of stakeholders, providing different channels for popular participation – can facilitate democratic public banking.