FREE BANKING – POSSIBLE SOLUTION TO THE RECENT CRISIS?

The free banking system, as a possible solution to alleviate the difficulties made by the recent financial crisis and to avoid such situations in the future, require the absence of central monetary authority and allow the establishment of private banks in conditions of freedom. The purpose of this article is to highlight the opinions pros and cons of adopting a free banking system and the ways in which it could provide a more stable financial system. In literature can be found proposals in the application of a free banking system based on fractional reserve or reserve 100%. Analyzing these issues, we conclude that in the economic systems will be supporters of both solutions, but the application of only one system which can ensure the general welfare must be experimented.