The Suffolk System: a completely private central bank during 1824-1854 in the United States
April 30, 2020, 6:06 p.m.
The Suffolk System was the first regulatory banking system arrangement of remote banks created in the United States. Starting in 1824, the Suffolk Bank of Boston, Massachusetts, along with six other banks, created a system that required country (non-federal) banks to deposit reserve balances in one or more of the participating banks, which guaranteed that each country bank could redeem their banknotes in specie. The Suffolk Bank became one of the most profitable in the country and continued to operate under the Suffolk System until 1858, when rival institutions complained of dictatorial practices and eventually national legislation banned state banknotes.