From One Collateral Shortage to the Next

Banking regulators may have made a big mistake, according to a new BIS working paper.

In 1863, with the U.S. still reeling from a bloody civil war, a plan was launched in Washington to simultaneously fund its military loans and strengthen the nascent American banking system. "We cannot maintain our nationality unless we establish a sound and stable financial system; and as the basis of it we must have a uniform national currency," Senator John Sherman urged at the time.

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