Submission on Evaluation of Community Banking and Local Provision of Banking and Financial Services in Ireland

Feasta’s Currency Group made this submission in response to a consultation call by Indecon International Economic Consultants, who are undertaking research on community banking for the Irish Department of Finance.

We welcome the opportunity to make this submission. We believe that community (or public) banking could form a central component of a healthy future Irish economy and, for reasons explained below, would argue that there is an urgent need to expand this sector in Ireland.


Feasta’s currency group feels that making a significant investment in the development and exploration of Community Banking in Ireland should be a national priority because:

● there is a major opportunity to accelerate locally-arranged funding for locally- grounded businesses – a powerful political message
● the German Sparkassen model has shown that lending into the local productive economy is feasible, and that such community banking needs no bail-outs during financial crises
● such exploration can include the potential scalability of the interest-free lending model pioneered by JAK bank in Sweden – a model that directly addresses the emerging consensus that growth is a poor proxy for progress
● any funding channel that prioritises lending into productive use as opposed to speculation or asset purchases should be made a priority
● focus on lending into productive use facilitates the development of sustainable investment schemas – including the prioritisation of pro-environment ‘credit guidance’
● strategically a more diverse banking system (as in nature) will be more resilient and sustainable than the current financial-system monoculture

Internationally we have an over-financialised economy. The original purpose of a central bank was to monetise sovereign debt so that the state was not reliant on borrowing from the private sector and could perform its primary role in allocating spending and investment according to national strategic priorities. This function has over the last 50 years progressively been taken over by the commercial banks and it is they who now effectively plan the Irish economy. Indeed, while Ireland is part of the Eurozone our central bank is forbidden to monetise debt, so no independent state action is possible on this front.

In this context, investment and development of a strong public banking sector is the most significant step the Irish government can take unilaterally to improve the quality of capital allocation in Ireland.

The submission is a collection of supporting analyses showing this thinking in more depth and illustrating Feasta’s efforts concerning the development of related ideas over the past 20 years, inspired by the thinking of its co-founder the late Richard Douthwaite. Topics include: the worryingly high level of debt-related financial risk in Ireland and how community banking could help to address this; community banking’s potential for strengthening local economies and helping in the transition to a growth-neutral (sustainable) economy; and the particular challenges faced at present by credit unions.

Read the full submission

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