Comparative Monetary Institutions

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The goal of this work is to provide a comparative perspective on the present monetary institutions. This topic is undoubtedly one of the most complex and interesting fields of economic inquiry. It is also a topic which has been paid due attention in the literature.

In the last decades, under the pressure generated by the numerous problems associated to banking and monetary policy, there has been a resurge of interest for an issue (fiercely debated more than a century ago) that seemed to be permanently closed. This issue concerns the monetary and banking institutional framework.

The discussion includes two separate topics. One the one hand, the critics approach the role of central banking in the monetary system, and point to a number of specific problems: is central bank the result of government intervention or the outcome of free market, (how) should central bank be regulated, is monetary competition able to deliver better results than central banking, is paper money more advantageous for society than commodity money etc. One the other hand, some authors have pointed out the existence of even more substantive weaknesses within the present banking and monetary framework. They are related to the inherent fragility of fractional reserve banking and the impossibility for this institution  to arise on the free market - and, therefore, to the incompatibility between fractional reserve banking and the institution of private property rights, an essential requirement for a free society.