InFi: the Future of Finance Ep. 100: Yes, Stablecoins are Like "Free Banking" in US History—and That's a Good Thing
Aug 8, 2025
Tyler Watts, a Professor at Ferris State University with a PhD in economics, dives deep into the evolution of banking by comparing historical free banking in the pre-Civil War U.S. to today’s stablecoins. He argues that, contrary to popular belief, stablecoins enhance the financial system rather than disrupt it. The discussion touches on the competitive advantages of stablecoins, their role in maintaining consumer trust, and lessons from historical banking failures that inform modern finance. A lively conversation about the potential of a market-driven banking future ensues.
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Stablecoins Are Dollar Access Tools
- Stablecoins are technically "currency" in banking terms but not a new unit of money.
- They function as means to access US dollars via different private payment technologies.
Banknotes As Promises To Pay
- Free banking lets banks issue banknotes backed by base money (gold historically).
- Banknotes are promises to pay the underlying money and can circulate as money substitutes.
Trust And Convenience Drive Note Circulation
- Bank-issued notes circulated because people trusted issuers and wanted convenience over hauling coin.
- That trust and convenience let notes substitute for coin until redemption was demanded.
