Free banking in France (1796–1803)

The Relationship Between Currency Competition and Inflation

“…The competitive issue of money in Switzerland was characterized by low inflation, and provided a secure monetary system. Continuing the research on laissez-faire regimes, Nataf (1992) surveys the literature on the experience of free banking in France. This period of free competition in the French money industry is unanimously considered efficient according to the literature Nataf surveyed.…”

“…Also, the French money industry was shown to be highly stable and helped to put an end to the long-running inflation caused by the monopolized currency supplied by the previous monarchial regime. Nataf (1992) stated that 'an arbitrary act of authority' put an end to the free-banking system in France, and the Banque de France was created to be the sole supplier of money to fund Napoleon's ambitions. Selgin (1988) succinctly characterizes the Australian episode of free banking as a period of time that was associated with fairly stable prices, while the monopolization of the Australian currency resulted in a 'dramatic' rise in prices.…”