Meanwhile, a Public Sector Bank opens in US…

It is always interesting to learn about different banking systems across the world. There is usually this odd story within the banking systems. For instance, discovering that State of Sikkim has its own quasi central bank was quite a revelation.

Likewise, one thought US only has private banks with even the Regional Federal Reserves having a private element to them. But then it has one public sector bank – Bank of North Dakota. In India, banks are owned by the Central Govt., but in US only States can open their banks. So far, only State of Dakota opened a public bank.

Now the American Samoa Islands (which is a US territory) have got their own Public Bank as well, named as Territorial Bank:

American Samoa is finally getting its own full-service bank — and successfully creating only the second public bank in the United States.

The Federal Reserve is allowing the Territorial Bank of American Samoa access to the U.S. payments system nearly two years after the bank first applied.

The decision is a boon to the remote U.S. territory in the South Pacific, where more than half of the households are at, near or below the federal poverty level. Officials across the seven islands that comprise American Samoa have been scrambling for a way to maintain local banking services since the Bank of Hawaii announced in 2012 it was leaving the territory.

“It’s a huge deal for the people of American Samoa,” Phil Ware, president of the Territorial Bank, said in an interview.

The other States are watching this experiment:

It is also a significant development for those far away from American Samoa. The chartering of a new public bank may provide momentum for similar efforts elsewhere. The only still operating public bank in the U.S., the Bank of North Dakota, was created a century ago. States like New Jersey and cities like Seattle and San Francisco are receptive to the idea of forming new public banks as a way to help the local economy.

“It does set a precedent,” said Ellen Brown, founder and president of the Public Banking Institute, which is backing the New Jersey effort. “It definitely will add impetus.”

Though the Territorial Bank, which is backed by the government in American Samoa, technically opened its doors in October 2016, it has been able to offer only a narrow menu of services until now. It lacked access to the U.S. payments system, which is necessary to offer banking basics such as debit cards and checks to customers.

 

 

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