Government and private e-money-like systems: federal reserve notes and national bank notes

Warren Weber

No 15-3, FRB Atlanta CenFIS Working Paper from Federal Reserve Bank of Atlanta

Abstract: The period from 1914 to 1935 in the United States is unique in that it was the only time that both privately issued bank notes (national bank notes) and central-bank-issued bank notes (Federal Reserve notes) were simultaneously in circulation. This paper describes some lessons relevant to e-money from the U.S. experience during this period. It argues that Federal Reserve notes were not issued to be a superior currency to national bank notes. Rather, they were issued to enable the Federal Reserve System to act as a lender of last resort in times of financial stress. It also argues that the reason eventually to eliminate national bank notes was that they were potentially a source of bank reserves. As such, they could have threatened the Federal Reserve System's control of the reserves of the banking system and thereby the Fed's control of monetary policy.

Keywords: Bank notes; e-money; financial services (search for similar items in EconPapers)
JEL-codes: E41 E42 E58 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2015-08-01
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Working Paper: Government and Private E-Money-Like Systems: Federal Reserve Notes and National Bank Notes (2015)
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