Document Type


Publication Title

Journal of Financial Regulation

Publication Date




Page Number



banking law, monetary institutions, regulation, entry restriction


Banking and Finance Law | Law


Entry restriction has a noble pedigree in banking law. Soon after the founding of the Bank of England in 1694, Parliament forbade all other business entities apart from small partnerships from issuing bank notes and their equivalents. Subsequent acts of Parliament confirmed that the object of the prohibition was to give the Bank of England the ‘privilege or power’ of ‘exclusive banking’. In the USA, similar prohibitions, called ‘restraining acts’, were established at the state level in the early nineteenth century. Later, when Congress established the national banking system in the early 1860s, it prohibited (through the device of punitive taxation) all other entities from issuing banknotes. Entry restriction remains at the core of US banking law today: it is axiomatic that no person or entity may maintain ‘deposit’ liabilities without a banking charter.

Entry restriction laws take the form of a blanket prohibition, binding not on banks but on everyone else. These laws define the privilege that a banking charter conveys; a banking charter confers an exemption from the prohibition. It is noteworthy that these prohibitions apply to a particular liability structure. The liabilities in question— bank notes and deposits—are widely understood to serve a distinctly monetary function. A central object of entry restriction laws, then, is to confine ‘money’ creation to the government itself and to one or more specially chartered bank



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.