The problem with this approach is that the current level of the 90-day rate is mainly a reflection of where the market expects the Reserve Bank to set the cash rate 90 days hence. The process then becomes completely circular. 6  See Pope (1989) for a discussion of "free banking" in Australia prior to 1910.
The more commonly cited case of free banking is in the 18th century Scottish banking system (see White, 1984). Note, however, that other writers such as Goodhart (1988) express scepticism that this was a true case of "free banking". 7  The best known proponent of this view is Hayek (1976). 4  BIS Review 77/2001  were attractive to the public.