caa a22 4500 388051140 CHVBK 20180307125054.0 cr unu---uuuuu 161130s1998 xx s 000 0 eng 10.1162/002081898753162811 doi S0020818398440359 pii (NATIONALLICENCE)cambridge-10.1162/002081898753162811 Broz J. Lawrence The Origins of Central Banking: Solutions to the Free-Rider Problem [Elektronische Daten] [J. Lawrence Broz] This article explains (1) the origins of central banking and (2) variations in the spread and durability of central banks across nations. Early central banks helped bind governments to honor their debts and thereby furthered governments' capacities to efficiently finance military expenditures. The origins of central banking are problematic because government credit-worthiness and efficient wartime fiscal policy are public goods, subject to the free-rider problem. Applying a variant of the joint-products model, I argue that governments offered private benefits (monopoly privileges) to select creditors to induce participation in central banks. To explain cross-national differences, I argue that the level of domestic political decentralization negatively affected the incidence and durability of central banking. Countries with decentralized political systems faced regulatory competition from strong local authorities as licensers of banking monopolies, making it difficult to adopt or sustain central banking. Qualitative and statistical evidence from Europe and the United States to about 1850 support the arguments. Copyright © The IO Foundation 1998 International Organization Cambridge University Press 52/2(1998), 231-268 0020-8183 52:2<231 1998 52 INO https://doi.org/10.1162/002081898753162811 text/html Onlinezugriff via DOI 1 research-article jats NATIONALLICENCE 856 40 https://doi.org/10.1162/002081898753162811 text/html Onlinezugriff via DOI NATIONALLICENCE 100 1- Broz J. Lawrence NATIONALLICENCE 773 0- International Organization Cambridge University Press 52/2(1998), 231-268 0020-8183 52:2<231 1998 52 INO CC0 http://creativecommons.org/publicdomain/zero/1.0 nationallicence BK010053 XK010053 XK010000 NATIONALLICENCE NATIONALLICENCE NL-cambridge