The Money Creation : Free Banking Versus Central Banking Debate

The present study analyzes the delimitation of money creation's major theories developed by the Banking School, on the one hand, and the Currency School, on the other hand. We took into account a series of researches on how the adopted banking policy is influencing the economic performance and the populations' living standards. In the end of the article, we conclude that there are only two possible options in choosing the most proper banking practice, that is either a free banking system grounded on a full reserve practice, or a fractional reserve banking which would necessarily lead to the imminent emergence of the central bank