Free Banking.

[Nordernious]

The proposal of "free banking" sounds, to us, like a reductio ad absurdum of laissez-faire capitalism. Its not something that Nordernious has ever practiced or something that we would ever consider. Allowing each banks to issue its own currency is an insane idea that would likely lead to out of control inflation and a complete breakdown of the monetary system. You'd be hard-pressed to find any Nordernian that would advocate that.

The Nordernian government regulates banks. Among those regulations is one that prohibits anybody who has been an executive at a bank in the past 10 years from having any say whatsoever over the nation's currency, for conflict of interest reasons. Instead, the government manages the flow of money to ensure that the economy remains on a sound footing.

[Aldina]

Free banking is illegal in Aldina; all banking is handled by the Imperial Central Bank, which in turn is administrated by the Imperial Ministry of Finance. Historically, some minor banks have managed to dodge this policy by referring to themselves as "money changers" or other financial institutions; most of the loopholes have been closed (often by, for instance, nationalizing the money-changers, to continue that analogy).

[Turaneistan]

The fraudulent system of banking is illegal.

[Novus Niciae]

The bank of the republic is the only bank in the republic permitted to offer banking services, it is a division of the department of the treasury. banking is considered to be a strategically critical service and as such it is a government monopoly.

Foreign banks may offer investment services in the republic and they may also offer accounting services and currency exchange services.

[Toin]

Strictly outlawed.

[New Hyannis]

The proposal of "free banking" sounds, to us, like a reductio ad absurdum of laissez-faire capitalism. Its not something that Nordernious has ever practiced or something that we would ever consider. Allowing each banks to issue its own currency is an insane idea that would likely lead to out of control inflation and a complete breakdown of the monetary system. You'd be hard-pressed to find any Nordernian that would advocate that.

History shows that this does not tend to occur, and many nations have used this system, but we understand your concerns.

[British Prussia]

In British Prussia, you can have free, unregulated banking, though those banks may only operate regionally, not nationally. Only banks that adhere to regulations may issue money.

[La Cosa Fedora]

The League of the Six Free Peoples does have a central bank, but other than that, banks are unregulated by the state, and may legally issue their own currency notes.

In practice, most bankers are residents of the penal colony province of Prepkoku, and are bound by the Voluntary Convention of Ethics in the Financial Industry. Banks that fail to volunteer to observe these rules have seen their upper management teams dissappear. Rumor has it that they end up in work camps and human experimentation labs.

[Triblios]

The Infinite Republic of Triblios likewise lacks any major private banks, with the services traditionally associated with such being split between the Government, small businesses operating informally, and the black market. This is due to the Government providing banking services and refusing to recognize any currency other than the Tokin domestically, and implementing exchange rates for currencies administered by foreign recognized States. There are private lending and investment businesses, but their success is effectively in limbo between still having a niche to fill, and yet not encountering major growth due to the combination of limited, "recreational funds" among the populace as well as the uncertain, yet overall continual, rise of incomes through an improving economy. The uncertainty among the populace of the economy promotes a risk-averse attitude, especially so with conducting extended business with non-government backed entities. The increase of social services provided by the Government also places another strain on the success of these businesses, as they are now effectively competing against a larger non-profit that focuses on the customer's well-being first.

This leaves the Black Market as the economic location of the largest private banks, serving to hide funds from the government as well as act as middlemen to both perform money laundering as well as conduct purchases of illegal goods and services. However the latter function of the bank is also unstable, as the Government's list of illegal goods declines and even begins offering those as well.

In short, private banks are a niche of the black and gray markets, places people go when they believe they are breaking the law or are subject to government interference, rather than a stable or more valuable alternative to the Government's services.

[New Hyannis]

I am reviving this as the OP to see if anybody else has interesting or unique insights concerning Free Banking.

[Les Guyanes]

The private sector can create their own form of currency, but they must accept Francs and taxes are to only be collected in Francs. It is illegal to convert unrecognized currency to Francs guyanais, all conversions must be regulated by the Ministère des Finances et de la Monnaie.

[Ardrentt]

Free banking in itself is not officially legal: Only the Ardrentt Central Bank is permitted to issue currency, working independently from the Ardrenttide Government.

The banking sector is moderately regulated (In comparison to New Hyannis, at the least): The belief from most Ardrenttides being that there is a sensible level of regulatory red tape over banks, though the belief is understandably less shared by people working in the banking sector. The alternative to that is a pretty popular option here, with banks only skimming slightly out as the largest choice (31%) over credit unions (28%) and building societies (27%).

Alternative currencies in the form of crypto-currencies, such as BitCoin, are allowed to be used as currency provide that the currency is accepted by the store: Such places do exist, though opinions of it as a viable currency are not great (15% for vs 76% against, surveyed amongst businesses), with only 1.6% of businesses registered accepting it in a formal capacity.

[The English Regions]

Some states do permit free banking with little to no regulation, but only to smaller financial institutions such as credit unions and building societies. It is seen as a way to keep money within the local economy as they are limited to the state in which they are printed. Examples of this include the "Sud Franc" and "Lire di Pravana". Basic Federal Financial Regulations of the Banque Nationale apply such as a "reasonable" fractional reserve system and certain fraud laws, also they must permit clients the right to exchange their currency for the national currency, the British Florin.

[Crysuko]

We operate on a planned economy, privately held assets are illegal.

[New Hyannis]

We operate on a planned economy, privately held assets are illegal.

Wonderful!

Does anybody else have any thoughts?

[Victorious Decepticons]

Having read this, what is the status of Free Banking in your nation? Dead.

Is it in use? Technically, yes, but only because Megatron never bothered to issue an edict to cancel it. Plus, we are notoriously unwilling to regulate anything except under severe duress. By "severe," we mean extinction-threatening.

If not, was it ever? Yes. As stated above, we hate regulations. Usually this works out. But in the banking industry, it did not. Free banking is at least 50% responsible for the fast extermination of the entire banking industry in Victorious Decepticons. The other 50% of responsibility goes straight to "the people" in general.

The Problem with Banks and Bankers in this Nation

Unlike most countries, our nation has no laws against fraud, theft (of any kind), deceptive practices, or any of that. This means that when applied to banking, it's perfectly legal for any putz to just put a sign out and claim his business is a bank. When we tried implementing banks, it goes without saying that a HUGE amount of people did this and then flew away into never-never-land with depositors' money. Since there are no laws against doing that, this left depositors to have to try to track these people down and (forcibly) extract their money back. Alas, any thief worth his chips will immediately change his paint job and even his engine in order to avoid being recognized when he has a lot of people after him, so these crooks usually had already blended into the general populace by the time word even got out.

The Problem with Banking Customers in this Nation

Unlike the stereotype, fraud and crookery certainly isn't limited to the banksters in Victorious Decepticons. The banks that tried to legitimately operate were quickly hit by strong gangs of domestic raiders who thought it'd be easier to knock them over than it is to hit a vault complex. FRAUD also works both ways here, with no tilt to the playing field. Lenders found themselves handing money over to people with "great credit ratings" only to never see more than a single payment back. The credit agencies were quite corrupt and all it took to get a great rating was a reasonable bribe.

This left bankers to have to try to do all of their own verifications. They'd inspect houses before giving out mortgages, interview neighbors, and do what would seem to be normal - or in some cases, extreme - due diligence before lending. Still, it was all for naught. Many times, when they went to foreclose, they'd find that the "borrower" had literally dismantled the house (a fairly easy job if you have a crew since our normal houses are made of standardized metal panels) and taken it to some secret location, never to be found again. Borrowers who didn't do this would often use their houses as forts, forcing the bank to either give up or engage in a dangerous firefight to oust them.

Fraud was even more rampant when it came to personal loans. After setting up the necessary fake credentials to get the loan, the borrower would simply fly off with the money and never be seen again.

Does it have any supporters presently? Most Decepticons agree that banking in Victorious Decepticons was a failure of epic proportions and have no serious desire to try it again in ANY form. We are not at all willing to give up our unregulated, piracy-embracing culture, so we accept having to use an entirely-cash economy as a necessary trade-off.

In most cases, we can make things work despite being conniving pirates who consider laws to be anathema and reward our best fraudsters with spots in the national Hall of Great Connivers. However, when something doesn't work due to the culture itself, it tends to fail spectacularly. Banking likely stands right at the top of the list of things that don't work AT ALL here. In the financial sector, it is possibly tied only by the stock market, which was also crushed almost instantly by fraud on all sides.

[Kirislavia]

We have no private sector, no private banks, etc., all aspects of the economy are controlled by the state. So, no, we do not have free banking.

[Imperium Sidhicum]

The Imperium maintains a state monopoly on all financial enterprises, which is contrary to the principle of free banking, so no, such concept does not exist in the Imperium.

[Nanakai]

Banking System in Nanakaʻi

Free Banking, as proposed by it's followers, does not exist in the islands. However, there are some particular freedoms.

The National Bank of Nanakaʻi (ʻAina Pali ʻo Nanakaʻi) is the central bank of our nation. It is state-owned and state-run and is in charge of monetary policy tasks, namely management of the reserves, giving out currency units, defining the prime interest, managing the exchange rate etc. Therefore, the Nanakaian Laupana (NKL) resp. the Nanakaian New Laupana (NKN) is the only legal tender in Nanakaʻi. The ʻAina Pali supplies the entire nation (including the New Territories) with currency units and is also in charge of credit accommodation - it is given the legal possibility to give loans to other banks within Nanakaʻi to the prime rate. Technically, it is also allowed to give private credits - however, the frequency of such business has declined down to almost zero since the 1990s.

The National Bank of Nanakaʻi has a quite strict reserve policy. They are legally committed to back the Laupana by reserves of foreign currencies and precious metals. A 2012 statute has obliged the National Bank to purchase gold and silver from abroad using the foreign currency with the goal of a full gold standard. - Electronic currency has to be 100% backed by physical money.

Next to the National Bank, there are savings & loan banks in Nanakaʻi, which are mostly private. They, in principle, can give credits and save fortune of private people as much as they like. However, they are forced by law to accurately assess the credit risk, to keep private banks from ruining their debtors. Also, the Bank Supervision Authority keeps track on investment and assesses their risk - highly risky investments are forbidden. High taxation prevents private banks from getting too big - which is also intended to pull currency units out of circulation again, to keep the Laupana from inflating.

Which makes banking business attractive, however, is the fact Nanakaʻi has a policy of bank secrecy. Savings banks are obliged to protect customers private data, which revelation of requires a damn good reason. For detecting tax evaders from abroad, a bilateral treaty between Nanakaʻi and the nation of origin is necessary.

Also, the National Bank is in charge of founding Bad Banks in case someone miscalculated an investment's risk. After all, everyone can be wrong sometimes. Even supervising authorities.

Just in case you wonder where these policies historically originate from

Nanakaʻi has been a socialist single-party state with all the bells and whistles from 1949 to 1990 - the Nanakaian National Bank has been the only legal bank existing in the Nanakaian People's Republic. The old Laupana (NKL) was fully backed by gold and silver reserves. - Bank secrecy has been a Nanakaian tradition since the 1930s, so it was also kept during the NPR era. The NBN worked as a savings bank; the NPR government had the plan to ruin capitalist enemy states on the long term by protecting their tax evaders - while it relentlessly revealed private data by tax evaders from allied socialist nations.

After 1990, the economy collapsed. The new government of Nanakaʻi managed to prevent the nation from suffering from worst-case scenarios and sold a whole lot of the precious metal reserves to become liquid again. Following a hyperinflation of the Laupana, the National Bank introduced the New Laupana (NKN) in 1991 and offered the people to revert old Laupanas into new ones at a 1000:1 ratio. Since then, the National Bank worked at establishing a new currency standard keeping the Laupana solid.

To avoid further shocks of that sort, Nanakaʻi decided not to privatize all of its business. Instead of establishing full Western-style capitalism, the government tried to manage the benefits of a capitalist system combined with those of the old socialist one. This includes, next to a reasonable amount of state-owned business while still allowing private business under stricter regulation, a regulation of the new private banking sector. As a result, Nanakaʻi was not concerned by the 2008 financial crisis at all. We can't be that wrong, duh.

(TL;DR: Imagine the banking secrecy policy of Switzerland combined with the National Bank policy of Serbia. That's us.)

[The One True Benxboro Empire]

Free banking in the Empire is considered heretical or at least questionable, likely rebellious and seditious, and as such is illegal.

[New Hyannis]

We have no private sector, no private banks, etc., all aspects of the economy are controlled by the state. So, no, we do not have free banking.

Ah, Socialist tyrants. How delightfully vomit-inducing. Thank you for answering.

Banking System in Nanakaʻi

Free Banking, as proposed by it's followers, does not exist in the islands. However, there are some particular freedoms.

The National Bank of Nanakaʻi (ʻAina Pali ʻo Nanakaʻi) is the central bank of our nation. It is state-owned and state-run and is in charge of monetary policy tasks, namely management of the reserves, giving out currency units, defining the prime interest, managing the exchange rate etc. Therefore, the Nanakaian Laupana (NKL) resp. the Nanakaian New Laupana (NKN) is the only legal tender in Nanakaʻi. The ʻAina Pali supplies the entire nation (including the New Territories) with currency units and is also in charge of credit accommodation - it is given the legal possibility to give loans to other banks within Nanakaʻi to the prime rate. Technically, it is also allowed to give private credits - however, the frequency of such business has declined down to almost zero since the 1990s.

The National Bank of Nanakaʻi has a quite strict reserve policy. They are legally committed to back the Laupana by reserves of foreign currencies and precious metals. A 2012 statute has obliged the National Bank to purchase gold and silver from abroad using the foreign currency with the goal of a full gold standard. - Electronic currency has to be 100% backed by physical money.

Next to the National Bank, there are savings & loan banks in Nanakaʻi, which are mostly private. They, in principle, can give credits and save fortune of private people as much as they like. However, they are forced by law to accurately assess the credit risk, to keep private banks from ruining their debtors. Also, the Bank Supervision Authority keeps track on investment and assesses their risk - highly risky investments are forbidden. High taxation prevents private banks from getting too big - which is also intended to pull currency units out of circulation again, to keep the Laupana from inflating.

Which makes banking business attractive, however, is the fact Nanakaʻi has a policy of bank secrecy. Savings banks are obliged to protect customers private data, which revelation of requires a damn good reason. For detecting tax evaders from abroad, a bilateral treaty between Nanakaʻi and the nation of origin is necessary.

Also, the National Bank is in charge of founding Bad Banks in case someone miscalculated an investment's risk. After all, everyone can be wrong sometimes. Even supervising authorities.

Just in case you wonder where these policies historically originate from

Nanakaʻi has been a socialist single-party state with all the bells and whistles from 1949 to 1990 - the Nanakaian National Bank has been the only legal bank existing in the Nanakaian People's Republic. The old Laupana (NKL) was fully backed by gold and silver reserves. - Bank secrecy has been a Nanakaian tradition since the 1930s, so it was also kept during the NPR era. The NBN worked as a savings bank; the NPR government had the plan to ruin capitalist enemy states on the long term by protecting their tax evaders - while it relentlessly revealed private data by tax evaders from allied socialist nations.

After 1990, the economy collapsed. The new government of Nanakaʻi managed to prevent the nation from suffering from worst-case scenarios and sold a whole lot of the precious metal reserves to become liquid again. Following a hyperinflation of the Laupana, the National Bank introduced the New Laupana (NKN) in 1991 and offered the people to revert old Laupanas into new ones at a 1000:1 ratio. Since then, the National Bank worked at establishing a new currency standard keeping the Laupana solid.

To avoid further shocks of that sort, Nanakaʻi decided not to privatize all of its business. Instead of establishing full Western-style capitalism, the government tried to manage the benefits of a capitalist system combined with those of the old socialist one. This includes, next to a reasonable amount of state-owned business while still allowing private business under stricter regulation, a regulation of the new private banking sector. As a result, Nanakaʻi was not concerned by the 2008 financial crisis at all. We can't be that wrong, duh.

(TL;DR: Imagine the banking secrecy policy of Switzerland combined with the National Bank policy of Serbia. That's us.)

An intriguing system with added historical notes. Thank you.

[Sezraha]

There is a central bank called the Sezran Central Bank (SCB) to set interest rates and monitor tax evaders; it is also the only entity allowed to produced Sezbir notes and coins (our currency).

[Aurensia]

Banner Economic Research Institute

Hello!

We are a collective of various schools of economic thought and analysts who collect nonpartisan public data to better formulate economic trends and hypotheses. We also contribute to economic understanding and historical research of data through research and dissemination. The Banner Economic Research Institute has been around since 1954, and has continued to lead Aurensia in what it does best: economic policy research.

The information supplied to the Institute will be used and disseminated exclusively for research and analysis as it relates to macroeconomic theory..

Overview

Under Right of Man IX the state is prohibited from infringing upon the economic relationships of the people as well as a constitutional inculcation of the duty to protect property rights. The Superior Court, other various forms of litigation, and the constitutional framework thereof has created a "wall of separation" between the state and the economy. Thus, besides the necessary enforcement of consensual contractual agreements and property protection against initiated aggression, neither the Confederation nor its Commonwealths interact with the people as economic agents. Aurensia has a completely laissez-faire market economy.

Status of Free Banking

In relation to the topic at hand, that is free banking, Aurensia utilizes this model of banking almost exclusively. Banks are wholly privatized and subject to no special forms of regulation or subsidy. A large number of international banking consortiums exist as well as small community banks in the various Commonwealths. The financial sector is typically represented by "Capital Wall" in Portsmouth, which is a section of the city dominated by the vibrant financial sector of Aurensia.

Currency in Aurensia

Currency issuance is unregulated in the Confederation, and the nation is host to a wide range of competing international and national currencies. Many banks issue their own notes and currencies for exchange. One of the most common forms of currency in Aurensia is its de facto most widely used (and sometimes called its "national") currency, the Antonne. The Antonne is gold plated coin (or gold-backed certificate) with a particular design involving Atoria, Lady of Freedom (Aurensia's national personification). This currency is minted by several banks and currency investment firms.

Many banking establishments accept each others notes for day-to-day interactions, and most businesses have a list of accepted currencies. Particular currencies are usually used more frequently in particular areas. An example of this is the Smith Bank Company Dollar which is widely used in the city of Exeter. Though there is some short-term instability when firms/companies particularly drive up investment and/or other competition in particular areas.

Background in the First Republic

Free Banking has been a staple in Aurensian economic life since independence in the 15th century. However, several Writs and Proclamations did lead to the establishment of some central banks and legal tender laws during the waning years of the First Republic.Several Commonwealths also previously created central banks, most recently Elliston in 1845.

[New Hyannis]

The latest round of answers was very interesting, and some of the approaches shown here have been fascinating. Anybody else want a go?

[Nueva San Cristobel]

The Central Bank of San Cristobal is the only legal house of printing for the Peso, other banks most certainly may not print their own banknotes, there would be financial chaos. It is also responsible for maintaining interest rates. Other banks are completely and utterly unregulated as with all business in San Cristobal.