Thread by @GeorgeSelgin

Thread: Why is currency monopoly so important to these gov't representatives? And what sort of dissembling are they up in claiming that they want "to make sure the currency monopoly remains in the hands of states”?

https://twitter.com/pesa_africa/status/1336000809432182784

Do they suppose that the only alternative to "states" possessing such monopolies is some sort of private currency monopoly? What about competition? Do they think it impossible? If so, on what grounds?

Not history: until the 20th century, state currency monopolies were the exception, not the rule. Many commercial banks issuer circulating notes, denominated and redeemable in what where then typically gold or silver standard money units.

Paper currency was not a "natural monopoly" then, and digital "stablecoins" aren't not. Only loose talk by economists who fail to stick to the expression's technical meaning makes people think otherwise.

Then there's the opposite myth--that competition in currency is bound to lead to a proliferation of currency brands, many of them disreputable products of fly-by-night issuers. Typically those who perpetuate this view appeal to antebellum U.S. experience. coindesk.com/in-the-wildcat…

The misinterpret that experience as exemplifying the results of unregulated competition. It was in fact nothing of the sort! The "badness" of that era's private currencies was almost all due to misguided government regulations. alt-m.org/2015/07/23/rea…

Competitive currency systems elsewhere were quite successful. Yet today's would-be digital currency monopolists and economists employed by them also misinterpret the records of those successful competitive currency systems.

Consider this Bank of Canada study of Canada's 19th century private banknote system. bankofcanada.ca/2017/02/staff-… Among other things it concludes "that privately issued digital currencies will not be perfectly safe...

"without government intervention, government-issued digital currency will not drive out existing private digital currencies, and government intervention will be required for privately issued and government-issued digital currencies to be a uniform currency."

In fact, if Canadian experience suggests anything, it's that such conclusions are unfounded. It took me three long posts to point out just how the BofC study goes awry. Here's the first; others are linked at the end of it: alt-m.org/2017/03/16/wro…

I'm the last person to say we shouldn't look to experience--including that of past centuries--to learn lessons about sound monetary and payments-system policies today. But while good economic history helps, the bad sort will only cause governments to repeat past mistakes.

Att'n: @CaitlinLong_ @FintechDiego @csissoko @jp_koning @nic__carter @CheyHopkins @Frances_Coppola @dandolfa @Machiavellecon @jerallaire @rch371 @dgwbirch