During the Free Banking era of US history (from when Andrew Jackson killed the 2nd National Bank until the Civil War, roughly 1837-1863) essentially every company that could get their state to give them a bank charter (very very poorly regulated) could issue its own paper notes that were treated as currency, with the very poor state regulation alone responsible for ensuring that they didn't print more notes than they had specie to back up.

You'll never guess, but most banks didn't actually have enough specie to back their notes, and banks constantly failed during the Free Banking era. If a bank failed then the notes value went to zero, and so notes always traded at a discount to their face value, and there were even brokers who were paid by local merchants to give them the latest correct discount rates for all the local banks (updating daily), and if a bank note got far enough away from the bank that the local broker didn't know about it, well, then it wouldn't be accepted by a local merchant. So effectively a similar result here in the capitalist, non-aristocratic US for about 15 years.

This is an enormous amount of overhead in actually running an economy, which was why it was ended and we had the National Banking Acts of 1863 and 1864 to try to create a more uniform currency, and the Bureau of Engraving and Printing created in 1862, etc. Because the actual businesses started to demand simpler accounting, and so more financial regulation of the banks.

> You'll never guess, but most banks didn't actually have enough specie to back their notes, and banks constantly failed during the Free Banking era. If a bank failed then the notes value went to zero, and so notes always traded at a discount to their face value, and there were even brokers who were paid by local merchants to give them the latest correct discount rates for all the local banks (updating daily), and if a bank note got far enough away from the bank that the local broker didn't know about it, well, then it wouldn't be accepted by a local merchant.

That sounds like a libertarian paradise. Sign us all up!