It may be a good idea; But the theory of free banking systems has proven not to be as successful in practice, as the evidence suggests.
Free banking prevents the economy from falling into cycles of boom and depression through monetary equilibrium. but it does not stop being true that it happens more or less the same as in a central bank system.
For example, when comparing the system of free banking in Scotland, with the central bank system of England, it was observed that there are other factors that influence; and that not necessarily a freer system means that it works better or is free of failures.
The problem is of an institutional nature, especially in the management of credit, savings, currency and how it is supported. The truth is that where money is backed by gold, there are greater opportunities to avoid crises and economies tend to grow, with expansion in investments and good credit management and payments.
On the other hand, a fractional system, where there is free banking and a reserve (central bank) has proven to be an error. In the 19th century, up to half, Chile did not have a central bank. In that period the Chileans enjoyed a great economy and a stable financial system; but when Jean-Gustav Courcelle-Seneuil (1813-1892) arrived, a prominent fractional-reserve free-banking theorist. In 1860 a law allowed to create that system with which artificial growth could be created (allowing to grant more credits than the banking and economic system could tolerate).
It was not long before inflation and the imbalance in the economy and the financial system left Chilean society on the verge of collapse.
what seems clear is that an economy free of restrictions and where the rules are clear and backed by solid principles and values (starting with the money backed by gold) will always face, in the worst case, the moments of recession ; although it is true that he will manage to avoid bad economic times in most of the time.
to expand this topic, you can consult this great article by Jesús Huerta de Soto
