Free Banking.

[Turnersland]

Our banking system is nationalised and centralised.

[Chuching]

ILLEGAL!

[The Lunar Domain]

What is the status of Free Banking in your nation?

Free banking is not, nor has it ever been, a system in use in the Lunar Domain. The federal government has always had an exclusive power over the national currency. As currently amended, the Lunar Charter states:

[...] the National Chamber shall have the legislative power to create the Lunar Credit, and regulate its value, and the value of foreign currency, [...] and to establish the law of punishment for counterfeiting any and all securities and currencies within the Lunar Domain and its New Lunar Republic.

As always, the responsible part of the federal government for executing these powers is the Treasury's Central Reserve. Although there have been various small movements to move towards some sort of standard, the currency has always been a fiat, albeit under tight controls.

This said, on a federal level, there has been a substantial decrease in government involvement with banks (and business in general). Largely, the federal government has power only in regards to a very specifically defined area of interest commerce:

[...] the regulation of commerce is not a plenary grant of power to the national government to regulate and control economic activity but a specific grant of power limited to preventing States from impeding commerce and trade between and among the States, and does not extend to activity within a state, whether or not it affects interstate commerce; nor does it extend to compelling an individual or entity to participate in commerce or trade.

As a result of these Amendments, the role of both the Treasury and the now-defunct Ministry of Public Welfare in banking policy is heavily restricted. However, many states have largely taken on these mantles, regulating banks to various degrees. Many back the funds that people put in banks to a certain amount, and mandate a standard of credit assessment, to prevent loans being issued that won't be paid back. A few mandate a investment ​standard that prevents overly risky investments. In general, however, the average citizen hasn't experienced a drastic change in terms of banking - there's some fair (as in degree, although many think it's synonymous with the other meaning as well) regulation, but still a private market. The only thing, really, that's changed is just who's administering the policies in general.

Background - A Compromise Government

When the Domain was founded, it was essentially as a compromise government between four major political factions that had unsuccessfully attempted to entirely dominate Dheghom. Out of the results of this compromise was a rather extensive guarantee of rights, over fears that if one party came to dominate the government, it would oppress the opposing parties. When partisan candidates began to be elected as the pre-presidential Prime Minister (due to cultural misconceptions, the term Prime Minister meant both it's common meaning and President, which in this case was the latter), a drive was made to guarantee further rights and a mechanism through which these rights could be protected, which resulted in the Second Amendment to the Lunar Charter.

Rights, although important, weren't originally the main part of the Lunar Charter that was most valued. The national government was, because of its nature as a compromise (compromise was, and still is, a major political principle), the original "core" of the Charter, partly because it was a platform for the four parties to peaceably enacted policy on a fairly national scale. Although states did exist, and federalism was the de jure system, this government bordered on a devolved unitary system.

Too big to fail... Barely.

Things began to change during the 2800s during the Changeling Riots, as the flaws of this system became apparent when compromise could not be had on admitting a new state. It was only through a questionable manuever by the Prime Minister at the time that the situation ended (the Prime Minister immediately resigned afterwards). In the aftermath, there was a sentiment that reform needed to be had, and the national government was, understandably, slightly reluctant to give away their own powers. As a result, the minimal reforms to the Lunar Charter that were proposed by the Lunar Parliament were quickly overshadowed by the drastic reforms proposed by Kenlikkran, a previously unheard of wingless dragon and former small town mayor who proposed his own Third Amendment. Essentially, it would heavily shift the balance of power away from the "federal" government and to the states, in addition to various checks and balances between statesnand the federal government, and some mechanisms to prevent the federal government from gaining more power. With minor revisions, his draft passed through enough state legislatures that it was put to Parliament, which was by that point under considerable pressure to sign the Amendment and send it to the Prime Minister, who was waiting for it. However, Parliament delayed deliberations, well, deliberately, until the next election, when Charles Warren Harrington, a social democratic Paladin, was elected. Though they finally voted in favor of the Amendment, the new Prime Minister wasn't particularly in agreement with the amendment, and withheld his signature; instead, he began pushing for some limited reforms that weren't constitutional in nature.

Rights Change

The Third Amendment was largely forgotten. However​, over the coming century, new tensions between the Domain and the Orion Council, which had refused to recognize the Domain since it's foundation, led many to begin learning more about the governments the Orion Council had. A new sense of respect for rights began to develop, as people realized just how totalitarian the rest of the galaxy had become.

Subconsciously, perhaps, those same wariness as in the early 2800s began, with the Market Crash on 3009, the military intervention in the Changeling Territories in the late 3020s, and the Cloudsdale Controversy beginning in the mid-3020s. Perhaps fearfully of tyranny taking root in the Domain at long last, the populace elected Phalanx Spear in 3028, who promised to end the intervention and negotiate an end to the Controversy. Though he succeeded in the former, the latter still hadn't happened in 3030.

It's debated whether Spear should be believed that his signature was the result of those fears, or if he had wanted to force an end to the Controversy, but in either case Spear signed the Third Amendment. His popularity fell, and the Parliament attempted to repeal the Third Amendment (this never left committee), even after passing the Transition Act designed to smooth the transition of government.

However, his popularity began to rise as states began taking on the responsibilities of the government in their own state, and were generally better at such functions than the federal government. Indeed, the Third Amendment became popular enough that two new Amendments were created, one establishing a carefully designed semi-presidential system in order to prevent the executive body from gaining too much power. The Fifth Amendment further reinforced various changes made in the Third Amendment.

Nowadays, just months after the formal ratification of the Third, Fourth, and Fifth Amendments, the Domain is beginning to work with a new system which will, hopefully, preserve the life, liberty, and prosperity for its citizens. Better one state goes south, than a nation, as it were.

[New Vaduz]

Not actively pursued but not explicitly illegal either.

[Ashkera]

It has been a recognized power of the state to issue currency since the year 2,201 BCE, under the reign of the First Empire. Ever since that time, it has been generally recognized that it is the prerogative of the state to issue and manage currency, understood even during the Interregnums.

This right has been recognized by the church as grounded in Shadow Path theology, in accordance with Blades:42:27, in which the governing body of the twelve kingdoms of the underworld issue the demoness Ishiko payment for her military services in the form of minted silver coins. Shadowist thought pervades Ashkera and much of the surrounding territory to the point that Ashkerans don't even notice it, and in Shadowist thought the nation is a kind of unified phenomenon of all people working together. There may be exceptional individuals, and they may be compensated appropriately, but to be honorable they must exist within the system. The idea of having multiple, independent, competing banks seems alien - and not in a good way. It's foreign in the same sense as a love for anarchy and disorder in a country where "Anarchist" is a snarl word the way "Fascist" is in the West.

Markets? Ordinary. Traders? Ordinary. "Free Banking"? That sounds suspiciously what some anarchist that wanted to greedily abolish the government for his own sake would do. After all, it is the state with its umbrella of force that legitimates property. Force precedes property.

Ashkerans have lived for nearly a century of rule under National Technocracy in the form of a Technocratic Constitutional Elective Monarchy Stratocratic Delegate Candidate Organization Republic, in which the legislature is composed chiefly of think tanks that bet on the outcomes of legislation and voting is restricted to those who have completed their National Service, the upper house are pseuodonymous, Autonomous State Organizations bid for grants on projects, and the identities of the executive leadership council are a classified state secret. They have a very different relationship with government than Westerners do.

It doesn't help that according to internal economic models, the existing Ashkeran banking system outperforms so-called "free banking" due to practical realities of implementation that do not exist in a frictionless vacuum.

[New Hyannis]

Good entries to date. Anybody else?

[Destructive Government Economic System]

What does "free" mean in my Empire?

You know... because freedom doesn't exist here.

[New Hyannis]

Bumping once more. I'm really enjoying some of the answers here.

[Karamiko]

Free banking, at least in the strictest sense of the word, does not exist in Antarctica. Currency is always issued by the government, and a central bank does exist. Other banks are allowed to operate here, of course, but are more tightly regulated than other businesses due to the large effect they have on the Antarctic economy and the financial lives of their customers.

[Appalachia]

It is not in use, Appalachia has a federal treasury that issues currency. Banks and credit unions are regulated as to the amount of fees and interest that they may charge, and transparency with customers is a requirement.

At one time, mining and logging companies in Appalachia would print their own currency (scrip) and pay it to workers for use exclusively in company-owned stores. This practice had mostly died out by the time Appalachia became independent in 1981 and was outlawed officially soon afterwards, as it discourages business growth in those regions and because company stores would often have severe markups on goods.

[Aeryis]

Banks in Aeryis are not allowed to issue their own currency, and are subject to stricter regulation than other businesses because of the unique and important role banks play in the overall economy. We are interested to learn more about how this system is working out for those countries that do use it, and we wonder under what circumstances such nations would see the need to revoke certain tenants of "free banking" for the preservation of stability when the need arises.

[Kenmoria]

Free banking does not exist in Kenmoria, money is issues by the state and there is a central bank. Whilst other banks are allowed to operate they are regulated more harshly that other businesses and are subject to a lot of regulation.

[Iliss]

Well, it used to be. At one point. The United Kingdom, mostly just Kingdom going this far through history, went through several systems of currency exchange. The Kingdom was founded around 951 AD and utilized a barter/coinage system, as was the norm for early medieval societies. The creation of coinage was minimally regulated by the Crown, but these regulations only grew as the Crown consolidated its power over the centuries, so it was not quite free banking as really the only reason the system was so hands-off was due to the lack of infrastructure that the modern United Kingdom has access to. Then paper money was introduced around 1788 AD and this was the closest our currency system ever got to what is described as Free Banking. Banks all over the Kingdom began issuing their own bank-notes and the government did not really attempt to regulate them, as it was seen as a convenient and welcomed change to cumbersome coinage. Due to grievances with the highly decentralized system, the Crown issued reforms during 1887 that resulted in the foundations of the modern centralized banking system where currency is issued solely by the Purple Bank and wherein laws have been created to specifically regulate all banks within the country.

[Marnady]

Illegal


All Banks belong to our great leader, the Evil One

[Alizeria]

Free banking existed for a relatively brief period of time in Alizeria - from around 1690 until 1710.

During that time the Royal Bank of Alizeria, the Bank of Alizeria (not to be confused with the former) and the Krostuk Building Society, along with a number of other institutions, formed a competitive banking system which was relatively stable.

In 1710, King George IV declared that the Bank of Alizeria would hold the "Crown" assets and gave it a monopoly over the ability to create currency, effectively making it Alizeria's central bank. The bank was fully nationalised in 1934, and its name was changed to the "Reserve Bank of Alizeria".

Since then there has been almost no support for free banking. In fact most Alizerians tend to support the other extreme, which is full reserve banking - something advocated during the 20th century by the Social Credit Party (who were for a long time Alizeria's third largest political party) and which in modern times have been discussed by both the Left Alliance and the National Party as possible policies.

[Truemerica]

All banks and other financial institutions are private, nationalizing or centralization of banks and other private industries by the state is illegal.

[New Hyannis]

I am exercising OP powers to revive this thread so as to let some new NSers have a crack at answering the question.

[Darussalam]

Darussalam has fairly liberal regulations on financial sector compared to many polities after massive economic reform of the 1950s, where the 3rd Convening Custodian Council formally dismantled dirigiste oligopoly that previously dominated Darussalami economy in face of growing informal sector, as well as replacing the integrated central bank, the Custodian Bank, with the private and independent Peacock Bank which acts as the clearinghouse and lender of the last resort. The polity's official currency, Custodian Dirham, is a free-floating currency issued by private banks.

Although there have been proposals regarding further regulation, the Core Policy Analysis Market (CPAM), the national prediction market that predicts on state policies, generally have predicted in favor of continuing the general framework of the status quo.

[Las Espanyas]

In 1983, Mallorca approved Free Banking on its Cortes. Since the Council of Aragon has less powers on its states than the Council of Castile does, Mallorca basically "experimented" with Free Banking.

Summary: The rest of states needed to RESURRECT (not rescue, resurrect) the Mallorcan economy and outlaw 50k currencies that were produced just in Mallorca alone. Among most suprising news, in 1985 Free Banking was outlawed. During the process of "re-establishment", it was found that there was money being lent legally to FICTIONAL CARTOON CHARACTERS and most of all, Mallorca couldn't recover economically until 1998. This experience basically raised the needed support in Aragon for the creation of the centralized Bank of Spain. So yes, it is outlawed and no Kingdom can approve it.

[Tinhampton]

Never. Although Silverside Bank did trot out some $5, $10 and $20 notes during the Tinhamptonian Recession of 1994, this was quashed by the incumbent conservative government under Constitution Section III.II.II the next year.

[New Hyannis]

Because I wish to place this idea in the limelight once more and give an opening for new answers, here it is again. Please be sure to check that you have not left a post here already, though if you have do feel free to make additional notes.

Thanks!

[DeVare]

We don't have free banking, as we have a central bank & single currency

[Thermodolia]

Federal law prohibits the use of free banking and bans multiple currencies. Only the Office of Engraving and Printing is allowed to print and issue currency.

Thermodolia operates under a reserve system with the Thermodolian National Bank being the central bank. Unlike many central bank systems the Thermodolian National Bank doesn’t have a major degree of independence from the federal government.

Per the Central Bank Act of 1931 the president appoints the half of the board while the Minister of the Treasury appoints the other half and the Governor of the Bank, the Senate must approve of all appointments. Furthermore the bank only has the authority to set its own goals and rates, a general budget is approved for the bank each year but there is no mandate as to how that money must be spent.

Regulation of the banking industry comes from the Federal Financial Institution Regulation Administration with insurance being provided by the Federal Credit Union Insurance Administration and Thermodolian National Deposit Insurance Corporation

[Willink]

Willink has no banking laws and unlimited private issuance of currency. See overview in signature for elucidation.

[Freie Stadt Wiedheim]

With the Free City of Wiedheim being known for its vast banking sector and relatively lax regulations thereon for a long time now, it should barely surprise, that Wiedheim quite has a history of competing currency units issued by licensed banks. However, this has changed in recent decades.
Starting in 1854, licensed banks were allowed to issue their own money bound to an amount of gold reserves. However, the Wiedheimer Taler, which had been continuously used and directly managed by the City Council since 1103, remained the currency most used, due to the trust of banks, which agreed on accepting their mutual currencies, and the general populace, which it kept enjoying. In 1917, Wiedheim left the Gold Standard system formally and also did away with the minimum reserve private banks were obliged to hold, but kept reliant on its reserves. In 1933, the Bank of Wiedheim was founded as a result of the Great Depression and the massive bankruptcy of private banks thereupon, with the job to manage the Taler in the same style as other central banks. The Free Banking system was suspended and got resumed in 1942, but with stricter regulations, like inflation control and Taler as a name for all currency units.
The control instruments worked well for a while, until Wiedheim faced a financial crisis in the 1970s, initiated by the pop of a speculation bubble and worsened by the massive emission of money by the Bank of Wiedheim in order to save companies, leading to inflation. The Taler got abolished in 1982 and replaced by a new currency named Batzen. Already in 1983, new regulations for Free Banking were passed, allowing private banks to emit Batzen money, but this time, again, mandating them to back their currency with certain amounts of gold and foreign exchange reserves. The variation in design of coins and banknotes confused the people, thus opened the door for massive counterfeiting of Batzen money, as these could barely be told apart from real cash.
13 years after the introduction of the Batzen, a City Council Resolution, known as Magistratsbeschluss 14/1995, stepped into effect, turning the Batzen into a digital currency, thus abolishing physical currency entirely. While this didn't touch the laws and guidelines on Free Banking formally, it de facto rendered them obsolete.