The United States had a free banking era from 1837 to 1864. During this time there was absolute minimal regulation of banks and every bank was able to issue its own currency. At one point there was a book passed around the Americas that listed every bank’s currency and its exchange value (generally a discount against the “real” dollar), based loosely on an assessment of that bank’s book of loans.
It seems like the world might be entering a new free banking era as Bitcoin is joined by Ethereum and Steem. Think about Steem for a second: someone has issued a currency that’s used to reward good Reddit/Fark posters.
This is going to be hard for central banks and finance ministeries to get their heads around, much less properly regulate. In the meantime a ton of individuals and small groups will issue “currencies” with working exchange mechanisms to hard currency, and chaos will ensue.
It’s only a matter of time before someone starts a cryptocurrency exchange and clearing system to emulate that original free banking book.
