Free banking is a monetary arrangement where banks are free to issue their own paper currency (banknotes) while also subject to no special regulations beyond those applicable to most enterprises. In a free banking system, market forces control the supply of total quantity of banknotes and deposits that can be supported by any given stock of cash reserves, where such reserves consist either of a scarce commodity (such as gold) or of an artificially limited stock of fiat money issued by a central bank. In the strictest versions of free banking, however, there either is no role at all for a central bank, or the supply of central bank money is supposed to be permanently "frozen". There is, therefore, no government agency acting as a monopoly "lender of last resort", leaving that to the private sector as happened in the US in the panic of 1907. Nor is there any government insurance of banknotes or bank deposit accounts. Supporters include Fred Foldvary, David D. Friedman, Friedrich Hayek, George Selgin, Steven Horwitz, and Richard Timberlake. History Banking has been more regulated in some times and places than others, and some times and places it has hardly been regulated at all, giving some experiences of more or less free banking. Free banking systems have existed in more than 60 countries. The first system of competitive issue of notes began more than 1,000 years ago in China (see below). Free banking was widespread in the 19th century and the early 20th century. lists most currently known episodes of free banking and discusses in some depth a number of them, including Canada, Colombia, Foochow, France, and Ireland. Monetary arrangements with monopoly issue of notes, including government treasury issue, currency boards, and central banking, replaced all episodes of free banking by the mid 20th century. There were several reasons for the demise of free banking: Economic theories claiming the superiority of central banking. Desire to imitate the institutions of more advanced economies, especially Great Britain. The Bank of England was the model for many later central banks, even outside the British Empire. Desire of national governments to collect seigniorage (revenue from issue) from note issue. Financial crises in some free banking systems that created demands to replace free banking with another system that advocates hoped would have fewer problems. Some prominent 18th and 19th century economists defended free banking, most notably Adam Smith, as opposed