Around the world, the United States has helped to establish development banks and fund large infrastructure and industrial projects. Dozens of national development banks worldwide have successfully deployed trillions of dollars that enable local industries to flourish. The European Investment Bank (EIB) and its “Juncker Plan” achieved a 15:1 ratio of private to public capital deployment, credited with creating more than 1.7 million jobs. No such American bank exists.

An American development bank could attract the private capital and restart the business investment growth required to rebuild American industrial capacity, stepping in where financial markets have failed to channel resources toward national economic priorities. Most stand-alone development banks operate with a “callable capital” model, funding their own activities and balance sheets through tax-advantaged debt backed by an implicit government guarantee. The bank’s cheap financing makes feasible a range of longer-term, higher-risk, lower-return projects that the private sector has eschewed, all with limited systemic risk. No major national or multilateral development bank has ever sustained major losses.

The United States should establish a national development bank to finance long-term, capital-intensive projects vital to national economic and security priorities. Its capabilities should include direct debt issuance, credit and completion guarantees, equity lending, syndication authority, and technical assistance. Its policy mandate should focus on attracting private capital to reshore domestic manufacturing, strengthen the defense industrial base, modernize the commercial maritime industry, and secure critical infrastructure. An American development bank with $100 billion in callable capital may be able to mobilize $1.5 trillion in private funds within a few years. Callable capital would represent the most taxpayers could ever owe—though if history is any guide, public cost would most likely be zero.