Germany's public savings banks, known as Sparkassen, present a three-fold puzzle for today's world of global capitalism. First, Sparkassen – relatively small financial institutions with comparatively few assets – are nonetheless the economic engines that drive Europe's largest economy. Sparkassen are the most important source of capital for consumers and small- and medium-sized enterprises in Germany, a country whose high-skill, export-based economy is built on small- and medium-sized enterprises. Sparkassen account for 43 per cent of all business lending (Simpson 2013), 70 per cent of lending to self-employed and trades, and more than half of all consumer lending (Deutsche Bundesbank 2020). No other advanced industrialized country in the world – let alone one with an economy as large as Germany's – relies as much on such small public institutions to fuel its economy.

A second puzzling aspect of Sparkassen is that their recent experience contradicts two key narratives in comparative political economy and international political economy: that global pressures and ascendance of neoliberal ideas will lead to the demise of Germany's unique form of capitalism and that in an era of global financial capitalism, competitive pressures force banks to grow in size and breadth (see Schmidt 2018). Smaller financial institutions lack the capital and know-how to compete; Sparkassen should be relics of the past. Yet, Sparkassen remain a central part of the German model. They embody the country's ordoliberal economic ideas and democratic principles of self-governance. In contrast to classical liberalism or neoliberalism, ordoliberals promotes a strong role for the state in the maintenance of a social market economy. However, the state is a rule-setting state (Blyth 2013: 146). Ordoliberalism views the state's role to establish a legal arena that maintains healthy competition, adheres to market principles, and lets market actors regulate themselves (Campbell & Lindberg 1990; Smyser 1993). In this sense ordoliberalism stands in contrast to libertarian or neoliberal ideas of economic freedom as unfettered competition with limited state involvement (Gook 2018).