Free Banking Scotland

About Free Banking Scotland

Scotlands free banking era from 1716 to 1845 is considered by some economists as a model of successful free banking. Scottish banks issued their own banknotes without central bank regulation. Multiple banks competed while accepting each others notes. The system was more stable than Englands during the same period, with fewer bank failures. Adam Smith praised Scottish banking in The Wealth of Nations. The Scottish system ended when Parliament imposed English style regulation in 1845. Some economists argue that free banking in Scotland demonstrates that banking can work without central banks. The debate continues between proponents of free banking and those who prefer central bank regulation. Scottish banks still issue their own banknotes today.