How should banks be regulated? Must governments tightly regulate banks to prevent financial panics, or is little or no regulation best? Can private banks be trusted to issue paper money or must this activity be a government monopoly? Theory can help answer these questions, but increasingly in recent years economists have turned to the natural experiments of history to find out how well free banking systems, or more accurately lightly regulated banking systems, have worked in practice. We now have numerous studies of lightly regulated banking in Scotland, the United States, Canada, and many other countries. As usual, research has produced new questions and heated controversies. The resulting ruckus tends to obscure the areas in which research has produced a consensus. Here we try to separate the areas where there is a consensus from areas where research is still in its early stages.
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Article provided by Atlas Economic Research Foundation in its journal Econ Journal Watch.
Volume (Year): 2 (2005) Issue (Month): 2 (August) Pages: 279-324 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation G29 - Financial Economics - - Financial Institutions and Services - - - Other N20 - Economic History - - Financial Markets and Institutions - - - General, International, or Comparative
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