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Submitted by Kai Schmitz on
I see little evidence that public sector banks are better at preventing or solving a crisis, or efficiently further development objectives. From Fanny and Freddy to Banco de Cafes and government owned savings banks in Europe the evidence is not encouraging. There seems to be an almost irresistable tendency to pursue unsustainable ideological goals, become a tool for political objectives, function as a retirement for political allies or distort the markets. In addition, no matter how narrow their mandate is defined, over time the government banks tend to expand their activities, begin to compete with private sector banks and enter sectors for which they are not appropriately qualified. Ultimatley, I am afraid the government banks do more harm than good - even with the best of intentions.