This is a welcome and timely debate. However, the contributions critical of state-owned banks do not seem to take adequate stock of the lessons of the recent financial crisis (and previous ones for that matter), or of the lessons of two decades of financial liberalization. They also do not seem to be rooted firmly in economic theory. The key lesson of the crisis and of financial liberalization is that finance is a public good, or at least has strong public-good characteristics: Financial stability is in everyone’s interest. And even before the crisis erupted, there was a growing concern at the World Bank that despite (or because of?) two decades of liberalization, the financial sector denies access to the vast majority of individuals and small- and medium-sized enterprises in developing countries. Economic theory tells us that markets will under-produce public goods; thus there is a rationale for government intervention. In developed countries, at least, there seems to be a consensus that more and better regulation must be provided by the state in order to maintain greater financial stability. In developing countries, however, economic theory also suggests that there are large externalities to providing greater financial access to excluded individuals and SMEs. Ending financial repression and liberalizing financial markets has clearly not been sufficient to ensure that private banks will allocate credit to all those who can use it fruitfully—to the detriment of the economy and society as a whole, as investment, employment and growth fall below their potential. Of course, it does not follow that state-owned or national development banks will everywhere and always be effective. Governments too can fail: critics are right to point to numerous examples of failed or corrupt government initiatives in the financial sector. The most cogent position emerging from the debate thus far was articulated by Professor Allen, and others who have argued for more pragmatism and less dogmatism. This is the sensible suggestion that the best system is a mixed one in which national development banks coexist, compete with, and complement the private sector. We must learn from the failures both of governments and markets to provide adequate financial access and stability, in order to make them both better.