In this short paper, first published in 1976, Nobel Laureate Friedrich von Hayek suggests that inflation can be stopped by introducing competition in currency. The notion that it is a proper function of government to issue the national currency is false. Citizens should be free to use and refuse any currencies they wish: politicians and central banks would then have to limit their quantities.
Hayek provided more detailed support for his proposal in Denationalisation of Money , published by the IEA later in 1976. Choice in Currency combines a concise explanation of the essential theoretical issues with an incisive analysis of key historical developments in banking, such as the gold standard and the Bretton-Woods agreement.
The monograph includes commentaries by Ivor F. Pearce, Harold B. Rose, Douglas Jay and Sir Keith Joseph. In addition, Sudha Shenoy provides 'A Note on Government Monopoly of Money in Theory and History', a fascinating examination of several case studies, including hyperinflation in 1920s Germany.
1976, Occasional Papers, ISBN 978 0 255 36078 4, 46pp, PB
The Road to Serfdom by F. A. Hayek
Denationalisation of Money by F. A. Hayek
A Tiger by the Tail: The Keynesian Legacy of Inflation by F. A. Hayek
Economic Freedom and Representative Government by F. A. Hayek
The Confusion of Language in Political Thought by F. A. Hayek
How Markets Work: Disequilibrium, Entrepreneurship and Discovery by Israel M. Kirzner
Money, Inflation and the Constitutional Position of Central Bank by Milton Friedman and Charles A. E. Goodhart
Hayek's Challenge by Bruce Caldwell
Private Money: The Path to Monetary Stability by Kevin Dowd