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Thanks Susmita.
It's very simple: free banking (non-regulated) with private currencies. Most likely people will settle with 100% banking (warehouse) with some commodity metals but are not limited to those if they prefer to use something else. Naturally electronic banking and cards can be used so not much needs to change in that front.
Henry Hazlitt fits here (see the full article)
”Private Coinage; Notes Fully Redeemable
Let us see where this leads us: Governments should be deprived of their monopoly of the currency-issuing power. The private citizens of every country should be allowed, by mutual agreement, to do business with each other in the currency of any other country. In addition, they should be allowed to mint privately gold or silver coins and to do business with each other in such coins. (Each coin should bear the stamp, trademark or emblem of its coiner and specify its exact round weight–one gram, 10 grams, or whatever. It would be preferably referred to by that weight–a goldgram, say, and not bear any more abstract name like dollar or ducat.) Still further, private institutions should be allowed to issue notes payable in such metals. But these should be only gold or silver certificates, redeemable on demand in the respective quantities of the metals specified. The issuers should be required to hold at all times the full amount in metal of the notes they have issued, as a warehouse owner is required to hold at all times everything against which he has issued an outstanding warehouse receipt, on penalty of being prosecuted for fraud. And the courts should enforce all contracts made in good faith in such private currencies.
At first glance this proposal would seem to be much more restricted and hampering than the Hayek scheme. But it would, in fact–if it could be achieved–lead to an almost revolutionary monetary reform. The competition of foreign currencies and of private coins and certificates would bring almost immediate improvement in most national currencies. The governments would have to slow down or halt their inflations to get their own citizens to continue to use their government's money in preference to the most attractive foreign currencies, or to private gold or silver certificates.
But something far more important would happen. As the use of the private currencies expanded, a private gold standard would develop. And because of the restrictions placed on it, it would be a pure, a 100 percent, gold standard. The government fractional-reserve gold standard–which was the “classic” gold standard–was finally stretched and abused to the point where, in my opinion, it can never be restored by any single nation or even by a “world authority.”
Worthy of Trust
But this, when one comes to think of it, will be ultimately a tremendous boon. For though people will probably again never trust a fractional-reserve gold standard, they will trust a full gold standard. And they will trust it the more if it is no longer in the exclusive custody of governments–consisting of vote-seeking politicians and vote-seeking officeholders–but also in private custody. The gold reserves will no longer be held solely in huge national piles–subject often to the overnight whim or ukase of a single man (Franklin D. Roosevelt or Richard Nixon). Gold coins will circulate, and be held by millions, and the gold reserves will be distributed among thousands of private vaults. The private certificate-issuers would not be allowed to treat–as governments have–this gold held in trust as if it had somehow become their own property. (In the U.S., that engine of inflation known as the Federal Reserve System would of course be abolished.)
Permitting private gold coinage and private gold-certificate issues will allow us to bring the world back to a pure gold standard. This has hitherto been considered an utterly hopeless project. As long as we were operating on a fractional-reserve gold standard, any attempt to return to a pure or 100 percent gold standard would have involved a devastating deflation, a ruinous fall of prices. But now that not only the United States, but every other nation, has abandoned a gold standard completely, the former problem no longer exists. The beginning of the new reform would bring a dual system of prices–prices in gold, and prices in the outstanding government paper money. In the transition period, prices would be stated in both currencies, until the government paper money either became worthless, or the issuing government itself returned to a gold standard and accepted its outstanding paper issues at a fixed conversion rate. (An example of this was the German acceptance of a trillion old paper marks for a new rentenmark–and finally gold mark–after 1923.)
Subsidiary Coinage
Government-issued money did supply a uniform subsidiary coinage. It is hard (though not impossible) to see how a private currency could solve this problem satisfactorily. Perhaps governments could be trusted to continue to mint a uniform subsidiary coinage and keep a 100 percent gold reserve at least against this.
But apart from such comparatively minor problems, I can see no great difficulties in the way of a private money. The main problem is not economic; it is political. It is how we can get governments voluntarily to repeal their legal tender laws and to surrender their monopoly of money issue. I confess I cannot see how this political problem is going to be solved. But it is the urgent and immediate goal to which every libertarian, and every citizen who can recognize the great jeopardy in which we all stand, should now direct his efforts.”
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