The Development of Opacity in U.S. Banking
NBER Working Paper No. 19540
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.
Document Object Identifier (DOI): 10.3386/w19540
Users who downloaded this paper also downloaded* these: