The key to a stable financial system: set banks free

Far from producing a stable financial system, central banks have achieved the exact opposite. So what's the alternative? 'Free banking' - where private banks print their own money and are allowed to fail like any other business. Seán Keyes explains.

Free banking offers a radical take on banking: banks should be treated like any other business. Free banks would be free to print their own money and lend it as they pleased. There'd be no central banks (so no Bank of England), no deposit insurance (so no £85,000 savings protection), and no banking regulations (not that the ones we have today worked especially well).

The central idea of free banking is that private banks would be free to issue as much currency as they liked. Your cash would carry the insignia of HSBC, say, rather than Charles Darwin or the Queen. That money would be a claim on some fundamental unit of money, which would form the bank's reserves. This might be gold, or it could even be fiat money. But whatever it was, the unit of reserve would - crucially - be fixed, and the entire money system would be overlaid upon it.

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Sean Keys graduated from Trinity College, Dublin with a BA in economics and political science and, in 2009, from University College Dublin with an MA in economics. His MA thesis was on the likely effects of deficient eurozone governance structures.