One may not have any choice in the matter…>>>>
Then how is your question different from “in a free society how do you protect against robbery?”
Really now, how is someone going to force me to accept fradulent notes? Why wouldnt they just attempt to rob me?
Who knows? I don’t. It could work given the discipline of profit and loss. Would it be risky for investors and depositors? Sure. Is it reason enough to ban it? I would not be against it but I would not (probably) invest in it either.>>>>
fraudulent notes are a very risky gamble. Historically, banks did attempt it and got burned a lot. Of course, we have no idea how many banks got away with secret fractional reserves. But if a specific bank’s notes were known to lack 100% backing, at best they would trade at a discount until the bearer had an opportunity to redeem them, at worst they would be rejected for transactions, and an unqualified offer of such fraudulent notes in the course of a negotiation would be seen as an attempt to defraud the other party by offering worthless exchange media.