The most exciting benefit of a public bank for Santa Fe is the fact that chartered banks actually create new money through a process called “fractional reserve banking.” When getting my MBA in finance, professors talked about it. Wikipedia, Bank of England and others have excellent online articles about this practice. It would multiply the amount of capital flowing through our community and supporting worthy projects several times over the initial invested capital.
Of course, we need pay attention to the city’s cash-flow management. Our city staff have been making valuable changes since the Public Banking Feasibility Study was completed one year ago. That, plus a public bank for Santa Fe, can create new, safe economic possibilities for a sustainable Santa Fe. It is important to remember that banks create money. No other financial intermediary can do that.
Alston C. Lundgren – Santa Fe
