A couple months ago, in arguing that “The Fed should give everyone a bank account,” journalist Matt Yglesias cited what he took to be an instructive precedent: “Once upon a time, governments didn’t issue paper currency, and instead banknotes were printed privately by banks. But over time, we came to see this as a worthwhile public service.” His first sentence is certainly correct. Banknotes were redeemable paper claims on the issuing banks, which circulated as currency. Systems of freely competitive note‐​issue worked quite well, as in Canada and Scotland, with the notes of different banks trading at par against one ... (full story)