Unfortunately I will not be able it make the highly anticipated debate between Bob Murphy and George Selgin on fractional reserve banking tonight, it should be a great event between two great scholars (and former Mises Institute alums). Though I'm obviously on Team Bob tonight, I did want to point out a great tweet from Dr. Selgin over the weekend that help shows the very superficial grasp of history many central bankers have.
In a thread sparked by recent comments from Mark Carney of the Bank of England about central bank digital currency, a participant pointed to an article from Stephen S. Poloz — the head of the Bank of Canada. While explaining his skepticism of cryptocurrency, Poloz remarks that providing cash "is an absolutely vital public good, which has always been provided by the central bank."
The problem as Selgin notes, is that central banks didn't provide cash for Cananda until the BoC was founded in 1935. Prior to that, Canada had a system of free banking and private currency — a monetary regime that proved to be far more stable than the United States under the Fed.
While this could perhaps be dismissed as simple absent mindedness on part of Poloz — his own "57 states" moment — the problem is that his entire point about the inherent "public value" of government-backed currency is directly undermined by Canada's own history. It is precisely because the record has shown that money is best left up to the market — coupled with the past decade of unprecedented monetary policy — that recent projects such as cryptocurrencies (along with private gold/silver/etc.-backed money) are so fascinating. On this point, I'll continue to shamelessly borrow from Selgin's work by pointing to his blog articles (Part 1, Part 2, and Part 3) that critique a paper about what Canada's history of private bank notes might mean for cryptocurrency.
