4 ms·
If by currency you mean paper and not coins, this is already the case. The Fed is a private institution with a government mandate to print paper money. The plat
by cmurf 8y ago
If by currency you mean paper and not coins, this is already the case. The Fed is a private institution with a government mandate to print paper money. The plates are owned by the U.S. Treasury, but the printing is performed exclusively by the Fed authorized by the Federal Reserve Act.
Because the U.S. Constitution authorizes coining but not paper currency, and the Federal Reserve Act authorizes the Fed to print paper, it's something of an open question to what degree the printing of paper currency is an exclusively federal power. But in practice anyone trying to print a competing paper currency domestically gets stomped on. As far as I'm aware though, it's untested if a state could print its own paper money - but to what end? I think it's a hypothetical really only of interest to monetary economists and perhaps some fringe politicals, which is where it would need to be explored substantially before it could ever emerge practically.
There are historic cases of private banks issuing paper money in the U.S., but it usually degraded into distrusting the currency, one exception being the Suffolk Bank system, but even that eventually came to pass. You could argue that your VISA, MasterCard, or Amex card is a private "currency" with a fixed exchange rate 1:1 with the card's issuance currency. By offering you a line of credit on the card, they've "printed" their own private currency, with an externally facing dollar (or whatever the currency happens to be in the card's issuing location). But as it's not in physical paper form, it's sorta shrugged off as a convenient derivative rather than a competitor.
And so back to the public bank question, most countries do have them. Their central bank is publicly owned. Bank of Germany, the Bank of Canada, the Bank of Mexico, etc.
- rtkwe 8y ago> You could argue that your VISA, MasterCard, or Amex card is a private "currency" with a fixed exchange rate 1:1 with the card's issuance currency. By offering you a line of credit on the card, they've "printed" their own private currency I don't think this really flies, the credit is paid, denominated, and collected in USD it's not separate in any useful or meaningful sense. They can't pay out more to merchants than they have in their accounts/credit lines.
- opo 8y ago>...There are historic cases of private banks issuing paper money in the U.S., but it usually degraded into distrusting the currency, ... I don't think that was the general case at least with the bank notes issued by the national banks after the civil war: >...From 1863 to 1935, National Bank Notes were issued by banks throughout the country and in US territories. Banks with a federal charter would deposit bonds in the US Treasury. The banks then could issue banknotes worth up to 90 percent of the value of the bonds. The federal government would back the value of the notes—the issuance of which created a demand for the government bonds needed to back them. >The program was a form of monetization of the Federal debt. Bonds eligible as collateral for posting to the Treasury were said to have the "circulation privilege" and the interest they bore provided seigniorage to the National Banks. https://en.wikipedia.org/wiki/National_Bank_Note https://en.wikipedia.org/wiki/National_Bank_Note The program was run for over 70 years, it was only with the Great Depression and the desire to have the Fed have greater control over the money supply that the program ended.