For our readers outside of Scotland, the idea of privately issued currency may sound strange.  While there are currently three banks with the right to issue their own currency in Scotland: the Bank of Scotland, the Royal Bank of Scotland, and Clydesdale Bank, these banks only have the right to print paper money, and do not exercise any control over the supply of money independent of the Bank of England.  However, banking systems have existed without central banks at many points in history.  In fact, from 1716 to 1844, Scotland had a truly free banking system, where no real central bank existed at all.

But what is free banking, and why should we prefer it to centralised government banking?  In this excellent new video from Learn Liberty, Dr. Lawrence White, professor of economics at George Mason University, introduces the concept of free banking, its historical prominence in the Western world, and the advantages it has over the current state-controlled banking system.