00:01    |    
Initial credits
19.8    |    
Introduction
00:46    |    
Money issued by the banks in the monetary system
Money multiplier
Required reserve ratio
Money issued and bank reserves
03:15    |    
Free banking versus central banking
Inside money is redeemable for some basic reserve money
Banks have no monopoly power in the markets
Banks practice par acceptance
Purchasing power money (ppm) in a small banking system
07:11.5    |    
Bank balance sheet
Assets
Risk-return tradeoff in reserve holding
Liabilities and equity
Notes in circulation
Deposits
Neil Wallace
Keeping notes in circulation
Balance sheet constraint
11:57.5    |    
Bank profit function
13:27    |    
Expected liquidity cost
Choices
Distribution of reserve gains and losses
17:13.349999999999909    |    
Profit maximization
Marginal benefits to lending equals holding reserves
Marginal benefits to lending equals marginal cost of financing
Via note-issue
Via deposits
Managing a bank of issue
22:33    |    
Holding a bank's currency
Attracting more depositors
Anti-counterfeiting measures
Non-price competition
27:24.5    |    
Correcting overissue
Overissue defined
Public's reaction
Interbank clearing system
Reserve gains and losses
Reserve losses and adverse clearings
32:27    |    
Competition versus a single monopoly issuer
34:6.7999999999999545    |    
Bank-issued money and nominal income stability
36:6.5    |    
Leading argument against free banking
Bank runs and panics
Lender of last resort
Legal restrictions on banks
39:29.300000000000182    |    
Positive aspects of bank runs
Insolvent banks
Threats of runs
Offshore banking market
Solvent banks
Runs on insolvent banks
Forbearance
43:42.5    |    
Run-prone banking
"Fire sale" problem
"Me first" problem
"Sunspot" or "bubble" theory
A good theory of bank runs?
Weak banking systems
"Bad news" theory
49:34    |    
What makes a bank contract run-prone?
Fragile contracts
51:03    |    
Contracts that are not run-prone
Equity claims
Conditional redeemability
Solvency assurances
Adequate capital
Safer portfolios
Certification by a bank clearing house
Extended liability
56:47    |    
Historical evidence on inherent fragility
57:49    |    
Question and answer period
Why isn’t counterfeiting a big problem in a free banking system? Similarly, the Internet can be used to provoke a run on a solvent bank.
Should conditions of entry for new issuers be regulated?
Would you comment on the incentives in a free banking system for banks to act responsibly.
What is the purpose of intermediary institutions and banking supervision?
01:13:45    |    
Final words
01:14:22    |    
Final credits



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Free Banking

24 de junio de 2009   | Vistas: 10 |  

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.

Versión en español La banca libre




Lawrence H. White is an expert in banking and monetary policy. He is professor of economics at George Mason University…

IDEAS DE LA LIBERTAD

Nuestra misión es la enseñanza y difusión de los principios éticos, jurídicos y económicos de una sociedad de personas libres y responsables.

Universidad Francisco Marroquín