NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Development of Opacity in U.S. Banking

Gary Gorton

NBER Working Paper No. 19540
Issued in October 2013
NBER Program(s):   CF   DAE   ME

An examination of U.S. banking history shows that economically efficient private bank money requires that information-revealing securities markets for bank liabilities be closed. That is, banks are optimally opaque, which is why they are regulated and examined. I show this by examining the transition from private bank notes, the predominant form of money before the U.S. Civil War, to demand deposits and show that markets endogenous closed. The opacity of bank money in the recent financial crisis is also briefly discussed.

download in pdf format
   (479 K)

email paper

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19540

Users who downloaded this paper also downloaded these:
Yermack w19747 Is Bitcoin a Real Currency? An economic appraisal
Gorton and Ordonez w18732 The Supply and Demand for Safe Assets
Gorton and Metrick w19292 The Federal Reserve and Financial Regulation: The First Hundred Years
Dang, Gorton, Holmstrom, and Ordonez w20255 Banks as Secret Keepers
Agarwal, Amromin, Ben-David, Chomsisengphet, and Evanoff w19550 Predatory Lending and the Subprime Crisis
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us