The current banking system has a reputation for being somewhat corrupt and unable to manage the money deposited in its banks. A poorly functioning banking system invariably affects the entire economic system of a country. In this conference, Lawrence H. White explains how the free banking system works: what the role of banks is and how the public’s money is managed profitably. In other words, how freedom enables institutions to succeed. White explains that banks maintain reserves in their vaults to create confidence in their users. He also describes what happens when financial institutions fail to have sufficient reserves to liquidate the notes they have issued. Two contrasting views are presented to explain this scenario: free banking and central banking. Finally, White comments on the principal arguments against free banking. He explains the risks of bank runs, explaining why they occur and what banks can do to avoid them.
Business School Building, EN-601 Universidad Francisco Marroquín Guatemala, June 24, 2009
A New Media - UFM production. Guatemala, June 2009 Camera: Manuel Alvarez, Jorge Samayoa; digital editing: Luis Barrueto; index and synopsis: Sergio Bustamante; content revisers: Daphne Ortiz, Jennifer Keller; publication: Mario Pivaral / Carlos Petz
This work is licensed under a Creative Commons 3.0 License Este trabajo ha sido registrado con una licencia Creative Commons 3.0
Lawrence H. White
Lawrence H. White is an expert in banking and monetary policy. He is professor of economics at George Mason University and the F. A. Hayek Professor of Economic History in the department of economics at University of Missouri – St. Louis. His teaching and research areas include economic history, monetary theory, money and banking, and history of economic thought. White holds a PhD and a MA in economics from University of California at Los Angeles; he also received his AB in the same area from Harvard University. He is visiting professor and holds an honorary doctorate degree in social sciences from Universidad Francisco Marroquín.