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China; currency boards

Here is my review of a book that was written half a century ago but is little known to English speakers: A Monetary History of China. China had periods of free banking at various times and places from 995 A.D. to 1941. Free banking in China has not received the systematic study it deserves, although George Selgin wrote about one case of it in a book Kevin Dowd edited, The Experience of Free Banking, and some other writing on the subject exists.

Three undergraduate students from Johns Hopkins University have compiled a new bibliography of scholarly writings on currency boards. One of their sources is a bibliography I compiled 20 years ago. I became interested in currency boards after seeing how many countries that once had free banking had replaced them with currency boards, which in retrospect was typically an intermediate step towards establishing central banks. Perhaps, I thought, the process could some day work the other way, with currency boards serving as stepping-stones from central banking to free banking. It was with that possibility in mind that George Selgin and I wrote papers in 1990 and 1991 proposing a currency board system in Lithuania. Lithuania moved from a central bank to a quasi currency board in 1994. We are still waiting for the move to free banking.