‘Currency competition’ means the virtually free entry of private-sector firms into the issuance of a currency. Such competition no longer exists, but interest in it revived in the 1970s as high inflation was attributed by some to governments’ incentives to overissue their currencies to generate additional seigniorage. Competition was advocated as a potential remedy because it was thought to give issuers an incentive to protect the value of their currencies by limiting issuance.
KeywordsBank Act 1844 (UK) Central banks Currency competition Currency School Fiat money Free banking Hayek, F. Inflation Inside and outside money Seigniorage Suffolk Banking System
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