Public Banking: Financial Infrastructure to Support Guaranteed Income

Overview

This report argues for the integration of guaranteed income (GI) policies with public banking initiatives to create a more effective and equitable system for cash transfers in the United States. It highlights the limitations of the existing private financial infrastructure in distributing pandemic-era relief funds and proposes public banking as a solution to ensure timely, low-cost, and secure disbursements of guaranteed income payments.

Key Findings

• The federal government's COVID-19 pandemic response, including economic stimulus payments and an expanded Child Tax Credit (CTC), exposed significant inadequacies in the private financial infrastructure for disbursing cash payments safely and efficiently.

• The success of the Bank of North Dakota, the nation’s only local public bank, in distributing more Paycheck Protection Program (PPP) loans to small businesses, relative to the state’s workforce, than any other bank in the country demonstrates the potential for public banks, which are owned and managed by government to serve the public good, as a solution to this distribution challenge.

• Four national public banking options—FedAccounts, postal banking, digital currencies (Central Bank Digital Currency and E-Cash), and federal legislation to enable state or municipally-owned public banks—could provide standardized, low-cost, and secure retail banking infrastructure for guaranteed income disbursements.

• It is crucial for guaranteed income and public banking efforts to incorporate anti-surveillance mandates to prevent or make it impossible for data to be shared with entities like Immigrations and Customs Enforcement (ICE), police, or debt collectors.

Policy Implications

Policymakers should consider a coordinated approach to implementing guaranteed income and public banking policies. This involves:

• Establishing public banks with specific mandates, governance structures, and functions that prioritize equitable investment in local communities and support the administrative capacity needed for efficient cash disbursements.

• Exploring national public banking options to create a standardized and scalable financial infrastructure for guaranteed income programs across the country.

• Designing public financial infrastructure to avoid charging expensive fees or exploiting guaranteed income recipients, thereby ensuring more of the funds reach those intended for support.

• Implementing robust anti-surveillance measures within any integrated guaranteed income and public banking systems to protect the privacy and sensitive information of recipients, particularly vulnerable populations.