Would there be any negative effects of a relatively small country (say the UK) adopting free banking? how large would the economic booms and busts be relative to today?
Do you mean gold standard or free banking? And why the UK and not Switzerland?
I would say it is a lot like Free Trade, there are only benefits, no matter the size of the country, OR what other countries have in place. For example, even if all other countries have very high tariffs, everyone would still be better off if you abolished tariffs in your own country.
The only negative effects I can see from Free Banking is implementing “Free Banking.” Like keeping in place Deposit Insurance, and all the other interventions, while at the same time acting like it is completely free (see Free Trade Agreements).
Impossible to say, it all depends on how much the government would get out of banking and money, but what you can say is that they would not be as bad.
In the short term there would be lots. The country or locality would have to get rid of lots of government. And this unravelling would have short term pain for lots of folks especially powerful banks who make their bonuses on the backs of tax payers and other currency holders by having risky behavior backed up by government. Also exporters will see issues as well. The other problem is that you will have to fight the 400 year old Mercantilist attitude that Exports are good and imports are bad.
The long run effects are very positive. Consumers and entrepreneurs will see the real savings available when engaging in business projects. This will focus the activities on those that please consumers thus growing the economy.
I said the UK because I live in the UK, it was just an example, it might aswell me switzerland. I meen free banking I suppose. I am just curious as to how much the global monetery policy would effect this hypothetical libertarian economy. also, as a follow up question, what do you imagine the best way for a country to transition from a fiat currency with cartelised banks to a free banking system?