In 2009, Mark Carney addressed the University of Alberta’s School of Business with a deceptively simple question: “What are banks really for?” Coming on the heels of the Great Financial Crisis, it was a question of pressing relevance—one that Carney, as governor of the Bank of Canada, was uniquely positioned to answer. His response was clear: “The financial system should be the servant of the real economy.” He elaborated on how the banks’ many borrowing and lending functions ought to benefit the people and businesses of Canada. In a healthy financial system, Carney explained, “young families can borrow to buy a house, students can pay for university, and businesses can finance working capital and investment.”

Less than a year before Carney’s speech, the unchecked greed of the financial sector had brought the global economy to its knees. It had become painfully evident that banks could no longer be trusted to fulfill their civic duty. This was why Carney felt compelled to insist that, if banks were to serve their essential social function, the state must regulate their behaviour “at all times.”

Yet the question he left unanswered was this: what happens when banks refuse to serve? What happens when, despite regulatory oversight, the financial sector drives up housing costs, saddles families with dangerous levels of debt, and begins to drag down the real economy under the weight of its own excess?

Fifteen years on, we find ourselves squarely in that scenario. For decades, banks have funneled credit away from the real economy and toward speculators—Real Estate Investment Trusts (REITs) and landlords who use loans to drive up property values. This artificially engineered demand, orchestrated by private finance, is the main force behind both soaring housing costs and historically unprecedented levels of household debt. Such a massive misallocation of credit leaves the economy highly vulnerable to external shocks, whether from trade tensions, market crashes, or disruptive technological shifts.

This is far from a fringe view. Even pro-banking institutions such as the International Monetary Fund (IMF) and the Bank for International Settlements (BIS) have published research indicating that the size and structure of Canada’s current banking system slows the real economy and heightens the risk of financial crisis. Drawing on a wide range of national and historical examples, these studies suggest there is a clear threshold for “too much finance.”

For context, Canada’s private debt now stands well above that threshold at 212 percent of nominal GDP.

Our bloated financial institutions have become a drag on both production and consumption, posing a serious risk to long-term prosperity. Even as Mark Carney notes that our “system is better” and “[r]egulation has been more consistent,” the financial sector continues to engage in economically destructive, anti-social behaviours that threaten to destabilize the nation.

It is time to ask whether there is a better way to organize our financial system.

Historically, when financial institutions have misbehaved on this scale people have come together to demand systemic change. In moments of crisis it becomes clear that to serve the real economy finance must be treated as a public utility.

In the summer of 1932, in the depths of the Great Depression, a coalition of labour unions, regional farmer organizations, local labour parties, and urban intellectuals met in Calgary to form the Co-operative Commonwealth Federation (CCF). Its founders were ordinary working Canadians who sought to unite the interests of farmers and labourers in a political movement capable of making Canada more just and equitable.

The CCF formalized its identity in January 1933 with the publication of the Regina Manifesto, which included the nationalization of banking as the party’s second demand. The language of the Manifesto echoes Carney’s 2009 speech: the CCF aimed to place the machinery of finance in public hands to enable “the supplying of new productive equipment for socially desirable purposes.”

Nationalizing finance was a top priority because the CCF understood that, whether public or private, bankers are a nation’s economic planners. Banks ultimately decide who receives money and how it is used. The question the CCF posed was clear: should the nation’s fortunes be directed by financiers or by democratically accountable public servants?

By 1933, private banks had already shown that under their control, money flowed to those who already had it and fuelled speculative bubbles. A public banking system, in contrast, promised to rationalize investment by directing funds away from stock market gamblers and toward economic development, research, and socially necessary infrastructure. For the CCF, the choice was obvious.

Today, we face a strikingly similar situation. Like the bankers of 1933, the financial elites of 2025 prioritize speculative gains over tangible investments in productive capacity. Most lending is directed toward purchasing existing assets—primarily residential and commercial real estate—fuelling bubbles rather than building the economy. Nationalization offers a way to rationalize this chaotic and destructive dynamic. A public banking system could refuse to finance real estate speculation, dismantling the financial engine of the housing bubble at its source. Odious debts imposed by private lenders over past decades could be partially forgiven through a nationwide jubilee project.

A publicly owned financial sector could also engage in anti-oligopoly lending, countering unfair pricing practices in industries like groceries, airlines, and telecoms. By declining to fund corporations seeking to expand by buying competitors, public banks could instead lend to those competitors, fostering a more dynamic and productive marketplace.

The benefits would extend even further. Publicly subsidized postal banking could ensure that financial services are accessible in every community. Pro-social lending, such as first-time mortgages, could be offered at rates aligned with the Bank of Canada’s. Commercial lending could be steered toward democratically determined priorities, supporting cooperatively owned businesses, green technology firms, and builders of affordable housing.

These kinds of public banks, which are mandated to offer financial services locally, rather than a profit-driven model, can be found around the world. The state-owned Bank of North Dakota, for example, has played an essential role in funding affordable housing and stabilizing the local economy while returning its profits to the public treasury. In Germany, a network of publicly accountable banks, the Sparkassen, provides the backbone of financing for the small and medium-sized businesses that drive the national economy. Modern creations like New Zealand’s Kiwibank shows that a public competitor can successfully challenge a private banking oligopoly on behalf of consumers.

The path to nationalization in Canada is entirely feasible. It would not require taking over every local branch; instead, it could involve the strategic acquisition of equity in the major chartered banks, shifting governance from private shareholders to a public trust accountable to Parliament. The existing infrastructure—the branches, ATMs, and employees—would remain intact, but the banks’ guiding mandate would be fundamentally transformed, prioritizing public purpose over private profit.

History shows that for banking to fulfill its social role as “the servant of the real economy,” it must function as a public utility. When lending and borrowing are left in private hands, rent-seeking financiers inevitably divert credit away from industrial growth, full employment, and rising living standards, while amplifying the economy’s overall vulnerability.

For many today, this argument may feel unfamiliar. Somewhere between 1932 and the present, private banking was made to seem both natural and desirable. This perception was reinforced beginning with the Bank Act of 1934, when finance was temporarily brought under effective state management. For a time, banks behaved responsibly, and over the decades, the urgency of nationalization seemed to fade. Successive Keynesian governments, using progressive taxation and the newly established Bank of Canada, channeled resources toward the social good—making a fully nationalized banking system appear redundant.

By 1969, the Canadian left had largely deemphasized nationalization. In the Waffle Manifesto—a document produced as part of a broader movement to pull the NDP back from its drift toward the political centre—calls for economic and political sovereignty took centre stage. Banking nationalization remained on the agenda, but was reduced to a single line buried deep in the penultimate point.

Since then, the question of nationalization has largely faded from public consciousness. While it occasionally surfaces on the left, it has not featured in any major political program for decades. It is time to reassess that approach. Over the past 40 years, the collapse of the ‘four pillars’ of banking has allowed a financial oligopoly to seize control of the nation’s credit supply, while a pervasive philosophy that all facets of life should be profit-making has become embedded at the highest levels of our financial institutions. These structural shifts have enabled banks to unleash their most destructive impulses on all Canadians. Economist Michael Hudson describes the modern financial sector as one that “leaves economies emaciated by monopolizing their income growth and then uses its takings in predatory ways to intensify the degree of exploitation.”

Some argue that the solution to a destructive financial system lies not in nationalization, but in stronger regulation. Yet regulation is only ever a temporary dam against the relentless pressure of private profit. Banks have proven adept at lobbying to weaken rules, innovating around them, and ultimately capturing their regulators. The problem is not a lack of rules, but the fundamental conflict between the private purpose of profit-making and the public purpose of stable credit allocation. Nationalization remains the only way to permanently align banks’ interests with those of Canadians.

In the words of the Regina Manifesto:

Power has become more and more concentrated into the hands of a small irresponsible minority of financiers and industrialists and to their predatory interests the majority are habitually sacrificed. When private profit is the main stimulus to economic effort, our society oscillates between periods of feverish prosperity in which the main benefits go to speculators and profiteers, and of catastrophic depression, in which the common man’s normal state of insecurity and hardship is accentuated. We believe that these evils can be removed only in a planned and socialized economy in which our natural resources and principal means of production and distribution are owned, controlled and operated by the people

James Hardwick is a writer and community advocate. He has over ten years experience serving adults experiencing poverty and houselessness with various NGOs across the country.