Monetary Policy with Unregulated Banks

An  analytical basis is provided for the conduct of monetary policy in an economy with a completely unregulated banking system. In particular, the paper addresses two major issues. Firstly, it establishes conditions under which the price level is determinate in an unregulated environment; secondly it examines the conditions under which either of two extremes, the quantity theory of money or the Modigliani-Miller theorem for open market operations, may hold. 

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