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Competition in Currency
Report

Competition in Currency

The Potential for Private Money

Thomas L. Hogan
Cato Institute, 2012
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6

Qualities

  • Innovative
  • Inspiring

Recommendation

Economist Thomas L. Hogan plows fertile if esoteric soil in examining privately issued banknotes. Drawing from detailed research, Hogan explains how the US’s pre-Civil War “free banking” system enabled pure currency competition and resulted in economic stability, limited inflation and substantial growth. In this report from the generally conservative Cato Institute, Hogan contends that a move away from central banking could benefit US banks and put an end to inflationary policies that have devalued the dollar. Although many argue that emerging technologies and payment systems are making cash obsolete, Hogan constructs an argument for private money and the establishment of a global “commodity-based currency.” getAbstract suggests this thought-provoking report on the unusual subject of the economic and profit-making potential of private money to investors, analysts, and banking and finance professionals.

Take-Aways

  • A decentralized US currency system could generate billions in bank profits while increasing stability and decreasing inflation.
  • Scotland, Northern Ireland and Hong Kong allow private banknote issuance, just as the United States did prior to the American Civil War.
  • Commercial banks are better equipped than central banks to ensure proper money supply levels.

About the Author

Thomas L. Hogan, an assistant professor of finance at Troy University in Alabama, is a former research fellow at the Cato Institute and the American Institute for Economic Research, and a former consultant to the World Bank.

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