The Review of Austrian Economics

, Volume 27, Issue 1, pp 57–69 | Cite as

Free banking as an evolving system: The case of Switzerland reconsidered

  • Alexander FinkEmail author


Selgin and White (Economic Inquiry 25:439–457, 1987) argue that during its evolution a free banking system can be expected to reach certain stages of development. This paper uses their conceptual framework to investigate the free banking era in 19th century Switzerland and makes three contributions to the literature on free banking. First, I find that the development of the Swiss banking system closely matches the stylized evolutionary path depicted by Selgin and White. Second, I argue that after the introduction of the federal banknote law in 1882, the Swiss banking system can no longer be characterized as one of free banking. Third, I maintain that the evolutionary approach offered by Selgin and White opens the door to a better explanation of inter-bank note exchange complications during the 30 years preceding the introduction of a Swiss central bank in 1907 than alternative approaches.


Free banking Switzerland Evolution Clearing arrangements 

JEL Classification

N23 E4 



I am grateful to William Luther, Adam Martin, Daniel Smith, and two anonymous referees for their comments and the Mercatus Center for generous research support.


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Copyright information

© Springer Science+Business Media New York 2013

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of LeipzigLeipzigGermany
  2. 2.Institut für WirtschaftspolitikUniversity of LeipzigLeipzigGermany

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