Banks are among the most heavily regulated institutions in today’s economy. Bank regulation, which seems both normal and immutable, is based on historical antecedents and current policy. The original advantages of a bank charter, such as insulation from competition and a role in the issuance of currency, have been eliminated over time. Today, banks are the beneficiaries of government support through deposit insurance, a central role in the large-dollar payment system, and access to the Fed’s lender of last resort facility. These benefits are often characterized as a “safety net” and are widely perceived to create risks for the government and the taxpayers that justify strict and costly regulation.

Nevertheless, it is possible to imagine a banking system that does not rely on government support, and hence does not create risks that mandate restrictive regulation. If that were to come about, would there be any further basis for regulating banks more strictly than other businesses? In this conference, a group of distinguished scholars and banking policy experts will consider that question.