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Saving the Post Office: Letter Carriers Consider Bringing Back Banking Services

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China's state-owned Postal Savings Bureau:

With the assistance of the People's Bank of China (the central bank), China's Postal Savings Bureau was re-established in 1986 after a 34-year lapse.  As in New Zealand, savings deposits flooded in, showing an extraordinary growth rate of over 50% annually in the first half of the 1990s and over 24% annually in the second half.  By 1998, postal savings accounted for 47% of China Post's operating revenues; and 80% of China's post offices provided postal savings services.  The Postal Savings Bureau has served as a vital link in mobilizing income and profits from the private sector, providing credit that is available to finance local development. In 2007, the Postal Savings Bank of China was set up from the Postal Savings Bureau and established as a state-owned limited company, which continues to provide postal banking services.

Japan Post Bank:

By 2007, Japan Post was the largest holder of personal savings in the world, boasting combined assets for its savings bank and insurance arms of more than -380 trillion ($3.2 trillion).  It was also the largest employer in Japan.  As in China, Japan Post recaptures and mobilizes income from the private sector, funding the government at low interest rates and protecting the nation's sovereign debt from raids by foreign speculators.

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Switzerland's Swiss Post:

Postal financial services are by far the most profitable activity of Swiss Post, which suffers heavy losses from its parcel delivery and only marginal profits from letter delivery operations.

India's Post Office Savings Bank (POSB):

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POSB is India's largest banking institution and its oldest, having been established in the latter half of the 19th century following the success of the postal savings bank system in England.  Operated by the government of India, it provides small savings banking and financial services.  The Department of Posts is now seeking to expand these services by obtaining a license for the creation of a full-fledged bank that would offer full lending and investing services. 

Russia's PochtaBank:

Russia, too, is seeking to expand its post office services.  The head of the highly successful state-owned Sberbank has stepped down to take on the task of revitalizing the Russian post office and create a post office bank.  PochtaBank will operate in the Russian Post's 40,000 local post offices. The post office will function as a banking institution and compete on equal footing not only with private banks but with Sberbank itself.

Brazil's ECT:

Brazil instituted a postal banking system in 2002 on a public/private model, with the national postal service (ECT) forming a partnership with the largest private bank in the country (Bradesco) to provide financial services at post offices. The current partnership is with Bank of Brazil.  ECT (a lso known as Correios) is one of the largest state-owned companies in Latin America, with an international service network reaching more than 220 countries worldwide.  

The U.S. Postal Savings System:  

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The now-defunct U.S. Postal Savings System was also quite successful in its day.  It was set up in 1911 to get money out of hiding, attract the savings of immigrants accustomed to saving at post offices in their native countries, provide safe depositories for people who had lost confidence in private banks, and furnish depositories that had longer hours and were more convenient for working people than private banks provided.  The minimum deposit was $1 and the maximum was $2,500.  The postal system paid two percent interest on deposits annually.  It issued U.S. Postal Savings Bonds in various denominations that paid annual interest, as well as Postal Savings Certificates and domestic money orders.   Savings in the system spurted to $1.2 billion during the 1930s and jumped again during World War II, peaking in 1947 at almost $3.4 billion.   

The U.S. Postal Savings System was shut down in 1967, not because it was inefficient but because it became unnecessary after the profitability of catering to the unbanked and underbanked became apparent to the private financial sector.  Private banks then captured the market, raising their interest rates and offering the same governmental guarantees that the postal savings system had.   

 

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Ellen Brown is an attorney, founder of the Public Banking Institute, and author of twelve books including the best-selling WEB OF DEBT. In THE PUBLIC BANK SOLUTION, her latest book, she explores successful public banking models historically and (more...)
 

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