Taming Wildcat Stablecoins
Publish Date: 30-09-2021
Author(s): Gary B. Gorton Jeffrey Zhang
Synopsis: Cryptocurrencies are all the rage, but there is nothing new about privately produced money. The goal of private money is to be accepted at par with no questions asked. This did not occur during the Free Banking Era in the United States—a period that most resembles the current world of stablecoins. State-chartered banks in the Free Banking Era experienced panics, and their private monies made it very hard to transact because of fluctuating prices. That system was curtailed by the National Bank Act of 1863, which created a uniform national currency backed by U.S. Treasury bonds. Subsequent legislation taxed the state-chartered banks’ paper currencies out of existence in favor of a single sovereign currency.
Public Link: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3888752
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