Nuevo borrador en SSRN.

Voy a estar presentando este artículo el próximo martes en la conferencia de APEE.

Abstract

Among the cited historical cases of free banking is the National Law of Guaranteed Banks in Argentina (1887-1890), a system which proved to be unstable. This historical case presents relevant risks that are attributed to free banking, the absence of proper regulation and a formal lender of last resort. As guaranteed banks vigorously expanded the money supply, they ultimately created a banking crisis.

The law, however, imposed very specific, though inefficient, requirements and regulations on money and banking. These regulations changed the economic incentives altogether and created a dangerous dynamic that was the real cause of the crisis. The Law of National Guaranteed Banks, then, is not a failed historical experiment of free banking but, rather, a failure to efficiently regulate the market.