From Ricardo to Renminbi: how China blends public money and decentralized banking

Embracing the three-legged stool of economics research (theory, history, and econometrics), we attest to China’s unparalleled economic rise as a function of the system of decentralized public banks. Our analysis of Chinese banking history since the dawn of the post-Mao reforms reveals that local policymakers desegregate inharmonious policy recommendations by Currency (ie public ownership of the money supply) and Banking School (ie decentralized money creation) prophets, stamping the institutionalization of a social democracy with Chinese characteristics. These empirical findings support our theoretical and historical narrations.