Are Central Banks necessary?

Two recent studies use history and theory to examine the likely consequences of eliminating government intervention in the provision of money. Such proposals would end the central bank monopoly over note issue and replace it with note issues by competing banks. Supervisory functions of central banks would be dispensed with. Accordingly, the proposals would free banks from all regulations on entry, disclosure, geographical limitations, and the products they may offer to customers. Monetary and banking arrangements would be left to the market. Unfortunately, the historical evidence does not speak as loudly in favor of free banking as its proponents claim.