ABSTRACT
Over the last fifteen years, there has been a revival of some of the economic doctrines of the old Free-Banking School under the auspices of a group of theorists who defend the idea that fractional-reserve free banking would not only lead to fewer distortions and financial crises than those generated by the current central banking system, but also tend to eliminate economic recessions. We will group these theorists together under the name of the ‘Fractional-Reserve Free Banking School’.2 This school is formed by a coalition of theorists with heterogeneous origins.3 Thus, its components include distinguished members of the Austrian School, such as Lawrence White,4
George A. Selgin5 and, more recently, Steven Horwitz;6 members of the English Subjectivist School, like Kevin Dowd;7 and, lastly, monetarists like David Glasner,8 Leland B. Yeager9 and Richard Timberlake.10 Even Milton Friedman, although he cannot be considered to form part of this new school, has gradually leant towards it, above all after his disappointment on seeing the failure of the central banks when putting his well-known monetary rule proposal into practice.11
