Hugh Rockoff on Optimal Currency Areas, “Yellowbacks,” and Free Banking
Macro Musings with David Beckworth
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The Free Banking Period
The US had a strong state-right system that hindered the US from becoming an optimal currency area at an earlier time. The Southerners did not want to see their banking system controlled from New York or Philadelphia or Washington, DC. It was also free in the sense that if you followed the rules that were laid out in the legislation, you could get a bank charter. So it was free in some ways, but not in others.
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