Now, before I start off, I'm not a libertarian by any stretch of imagination. I wouldn't support any particular policy recommendation just because it is "moral", "respectful of property rights" or "pro-liberty". However, one particular policy recommendation associated with libertarians does seem so sensible on pragmatic ground that it deserves to be debated outside libertarian circles, namely, free banking.
In free banking, every commercial bank additionally has a function comparable to a country's central bank, and thus may issue its own currency, backed by the assets the bank owns (which doesn't have to be just gold and silver, but can also be, for example, resources and corporate stock), as well as by liabilities not denominated in the currency that is being issued.
This has the clear advantage that the collapse of one bank does no longer entail any systemic risk. After all, banks do not have to collapse any longer, as they can devalue their currency to match the total assets owned by the bank, and the other banks are for most part insulated from any negative effects such a devaluation may bring.
I can't see any disadvantage of such a system: Please prove me wrong. It seems almost too insane to be true.
In free banking, every commercial bank additionally has a function comparable to a country's central bank, and thus may issue its own currency, backed by the assets the bank owns (which doesn't have to be just gold and silver, but can also be, for example, resources and corporate stock), as well as by liabilities not denominated in the currency that is being issued.
This has the clear advantage that the collapse of one bank does no longer entail any systemic risk. After all, banks do not have to collapse any longer, as they can devalue their currency to match the total assets owned by the bank, and the other banks are for most part insulated from any negative effects such a devaluation may bring.
I can't see any disadvantage of such a system: Please prove me wrong. It seems almost too insane to be true.