Jesse Hathaway writes at Human Events about the potential economic benefits of opening up alternatives to the dollar.

Allowing alternative currencies to arise and evolve in the United States could be a boon for the nation’s economy. In a policy paper for the Cato Institute, West Texas A&M University assistant professor of economics Thomas L. Hogan says the Federal Reserve’s money monopoly is holding the economy back.

“Legislation clarifying the rights of private banks to issue currency could help clear the path toward a return to private money,” Hogan wrote.

Hogan says there are strong economic incentives for a freer money market. “Considering that banks issuing private notes in Hong Kong, Northern Ireland, and Scotland earn hundreds of millions of dollars annually, it appears U.S. banks may be missing an opportunity to earn billions of dollars in annual profits,” Hogan wrote.

The creation of alternative currencies is currently hamstrung by concerns over potential government interference. “Congress needs to guarantee the feasibility of private money for the benefit of consumers in the United States and around the world by clarifying the legal status of private banknotes” and “prohibiting the Fed, Treasury, and Justice Department from taking action against private money producers,” Hogan said.

Removing the barriers to entry in the money market would increase the amount of currency experimentation and result in continual improvement of currencies. Allowing consumers to conduct transactions freely and voluntarily using their favored currency would permit the cream-of-the-crop cash to “rise to the top,” as consumers would increasingly adopt the currencies with the characteristics they want most. Safety and reliability are among the most obvious of these, and although the U.S. dollar is widely considered to be safe, the Fed’s currency manipulation makes the dollar anything but reliable.

Opening up currency competition can’t be any worse than trashing the dollar.