In those days U.S. Treasury bills and bonds were not acceptable as collateral for note issuance at the reserve banks.

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Governments took over note issuance from commercial banks not because the private sector was doing a bad job, but because governments wanted the profits for themselves.

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In some countries bank failures caused losses to note-holders, but the losses were small compared with those inflicted by the central banks that later took over note issuance.

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