Financial Stability Without Central Banks
Financial Stability Without Central Banks shows how a system of private banks without a central bank can bring about financial stability through self-regulation. It draws on evidence from the era of 'free banking' in Scotland and Canada. These arrangements enjoyed greater financial stability, with fewer banking crises than the English system with its central bank and the US model with its faulty government regulation. The creation of the Federal Reserve appears to have increased the frequency of financial crises.
- Financial Stability Without Central Banks also includes commentaries by Kevin Dowd and Mathieu Bédard.
- Dowd asks whether free-banking systems should be underpinned by a gold standard, which he regards as a tried-and-tested institution at the heart of their success.
- Bédard challenges the assumption that the banking sector is inherently unstable and therefore requires state intervention. He argues that increases in government control have made the banking system more prone to crisis.