12 Feb 2019

Is Non-State Money Possible? mBank – CASE Seminar Proceedings No. 158

"Depending on how one interprets the question that forms the topic of my talk, one can argue that the answer is obvious, or one can argue just the opposite. In one sense of course, it’s obvious that non-state money is possible. That’s the sense in which we ask only whether some kinds of non-state money are possible. And of course, the answer is yes. The vast majority of payments today, in Poland as elsewhere, are made with privately produced forms of money – that is, with bank deposits of various kinds – transferable by cheque or using debit cards. And there is nothing surprising about that.

But of course, my assigned question can also be understood in a different and more interesting way. The interesting question is not whether some kinds of non-state- supplied money are possible. It is a different question, or rather two different questions. One of these is whether non-state circulating monies, or currencies, are possible. Can we rely on the private sector to supply hand-to-hand circulating means of payment? The other even more fundamental question is whether we can have a complete monetary system in which all forms of money supplied privately, and the state plays no substantial regulatory role.

In fact, I intend to argue that non-state supplied currencies are also possible, and that completely private monetary systems, in which the state plays no important part, are possible as well. Indeed, I will argue, not only that these things are possible, but that history offers examples of them. That is, they are not just hypothetically possible. I plan to spend much of my time talking to you about these historical examples of privately produced currencies and private or mostly private monetary systems. I wish not merely to make it clear that private currencies and mostly private monetary systems really have existed in the past, but to point out to you that these private currencies and monetary systems have often been entirely or at least highly successful. We might even envy them today, given the performance of our own relatively heavily regulated monetary systems." - Prof. George Selgin writes in the introduction.


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