Interest in public banks is ascendant. The global recession in 2007/8 and the economic crises triggered by the coronavirus pandemic underscore the vulnerabilities of our financial systems and the role public banks play in bolstering and stabilizing economies. The policy scholar, John Kingdon (2011), argues in his seminal book Agendas, Alternatives, and Public Policies that major policy shifts occur when a problem stream, policy stream and political stream merge. Moreover, the merger does not occur by chance or naturally but is the result of three factors: (1) consistent and sustained action by advocates; (2) a triggering event; and (3) policy entrepreneurs capable of using the crisis to bring the streams together. Throughout Europe and Latin America public banks are playing a central role in governments’ response to the economic impact of Covid-19 (IMF 2020; European Association of Public Banks 2020). Public banking advocates are pressing the case globally for the importance of public banking and political opportunities are opening up that had once been improbable. Drawing on Kingdon's insights, public banking's role in national economies is likely to grow particularly in countries that have traditionally resisted the idea like the United States. An understanding of public savings banks – how they operate and thrive – is now more important than ever.

A simple puzzle prompted this book. Sparkassen were established over two centuries ago to provide the poor and working-class with access to credit. Public savings banks populated nearly every European country, guaranteeing governments, firms, and citizens a stable source of credit and a safe place to deposit their savings. Yet, public savings banks have gone the way of the Dodo, morphing into enterprises that resemble commercial banks or disappearing entirely. The Great Recession of 2007/08 accelerated the process. Large multinational banks used their enormous public bailouts to expand market share, increase their size, and drive community banks and public savings banks out of the market. In Germany, this seemingly inexorable march toward greater consolidation of the banking sector appears to have been halted or slowed.

During a period of record-low interest rates and rising regulatory burdens, Germany's small, independent, local public savings banks remain a robust part of Germany's financial landscape. They are the primary bank for half of all German consumers, have 94 million accounts, are the main bank for 40 per cent of all German businesses, and account for 70 per cent of all lending to small and medium-sized enterprises (SMEs).