only way to avoid them is to wipe a slate clean and this is practically impossible. But yes in a theoretical world where water flows steadily under the bridge and nothing is sticky, maybe recessions aren't necessary. Private currency is no more inconventient that having private checkable deposits. You seem to be assuming variable exchange rates. In the past, most private currency systems have had all currency denominated in common units and redeemable in a base money. The obvious choice is central bank reserves. There is no reason to make hand-to-hand currency central to the monetary system or the banking system. We shouldn't run the monetary order so that Nick and the Winos can cope. You don't have to outlaw it. Just don't make everything de jure redeemable in it. If one, or even all, issuers of currency go broke, then Nick and the winos take a loss. They are out of luck until new currency is issued. No one thinks that currency is a super secure store of wealth. People hold it for limited periods of time. (You know, spend it at the store and the store deposits it.) What is the benefit of making hand to hand currency central to the monetary order? "This phrase 'lender of last resort' has been bandied around by people who, it seems to me, have no idea what lender of last resort actually means, to be perfectly honest. It is very clear from its origin that lender of last resort by a