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Adam Smith and the bankers: retrospect and prospect

Duncan, Alfred, Nolan, Charles (2024) Adam Smith and the bankers: retrospect and prospect. National Institute Economic Review, 265 . ISSN 0027-9501. E-ISSN 1741-3036. (doi:10.1017/nie.2023.24) (KAR id:103267)


Adam Smith promoted free banking—private, competitive, convertible banknotes. He also supported restrictions on banks. We study Smith’s views and the era in which they developed, suggesting his ‘regulations’ were a backstop against banks’ risks to depositors but primarily monetary stability. In

modern parlance, Smith supported macroprudential regulations to underpin monetary stability, as did Friedman and Schwartz (1963) the US FDIC. We discuss why Smith’s vision for banking went unrealised. Bank regulation became microprudential and ran aground in 2008/9. The prominence of macroprudential regulation on now provides a chance to reorientate regulation on to support monetary stability. Early signs are not promising.

Item Type: Article
DOI/Identification number: 10.1017/nie.2023.24
Uncontrolled keywords: Adam Smith; Banking Regulation; Economic History; Monetary Policy
Subjects: H Social Sciences > HC Economic History and Conditions
Divisions: Divisions > Division of Human and Social Sciences > School of Economics
Funders: University of Kent (
Depositing User: Alfred Duncan
Date Deposited: 12 Oct 2023 08:02 UTC
Last Modified: 26 Jan 2024 09:55 UTC
Resource URI: (The current URI for this page, for reference purposes)

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