"Currency competition and free banking might increase the efficiency of the financial system, and bring some small triangle welfare gains. But the key question is whether their adoption would improve macroeconomic performance. Even though Salin argues (p. 281) that ‘the best system is that which produces the least inflation’, fluctuations in output are also expensive. Hayek states that the adoption of his proposal would end recessions. There is absolutely no reason to believe that. Nineteenth century history is evidence that free banking and currency issue, in the wrong legal and regulatory framework, can produce rather than reduce instability. The proponents of free banking and currency issue in this volume do not go much beyond a general belief in competition in justifying their views; they have certainly not explored the necessary legal and regulatory environment in any detail."
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Academics from the United StatesImmigrants to the United StatesJews from IsraelEconomists from the United StatesPeople from Northern Rhodesia
Original Language: English
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Stanley Fischer, "Friedman versus Hayek on Private Money: Review Essay" (1986)
https://en.wikiquote.org/wiki/Stanley_Fischer
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Stanley Fischer
(Hebrew: ×¡×˜× ×œ×™ פישר‎‎; October 15, 1943 – May 31, 2025) was an economist and the vice chair of the U.S. Federal Reserve System. Born in Northern Rhodesia (now Zambia), he held dual citizenship in Israel and the United States. He served as governor of the from 2005 to 2013. He previously served as chief economist at the .
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