“It is easy to note what is absent from a pure laissez faire monetary regime. There is no government control of the quantity of exchange media. There is no state-sponsored central bank. There are not legal barriers to entry, branching, or exit of commercial banks (or non-bank financial institutions, assuming any distinction can be drawn). There are no restrictions on the quantities, types, or mix of debt and equity claims a bank may issue, or on the quantities, types or mix of assets it may hold. Interest rates are not controlled. There are no government deposit guarantees. In general, no restrictions are placed on the terms of contracts made between banks and their customers, beyond the requirement that they adhere to the standard legal principles governing all business contracts.” Read more.
“How Would the Invisible Hand Handle Money?”
George A. Selgin and Lawrence H. White
Journal of Economic Literature, Vol. XXXII (December, 1994), pp. 1718-1749.
Via JSTOR (Subscription).
Image by dan / FreeDigitalPhotos.net.