Free banking: the track record

Sam Bowman, from the Adam Smith Institute, just published a very good paper arguing that, in case it decides to declare its independence, Scotland should ‘sterlingise’ and recreate a free banking system similar to the one it used to have in the 18th and 19th century. This report has been featured in many newspapers today (BBC, City AM, The Scotsman, The Guardian, The Wall Street Journal, The Huffington Post, The Telegraph…). Whether or not the current socialist-minded Scottish government is likely to implement such radical liberalisation of its banking system is another issue…

In this report, Sam Bowman also reproduces two very important tables (originally from George Selgin’s article Are banking crises free markets phenomena) highlighting the track record of free (or mostly free) and regulated banking from the late 18th till the early 20th century. Guess which type of banking system was more stable…

‘Unfree’/regulated banking:

Unfree Banking Track Record

Free/lightly regulated banking:

Free Banking Track Record

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