Central Banking Is Designed to Remove the Limitations Free Banking Imposes on Inflation

Free banking, then, will inevitably be a regime of hard money and virtually no inflation. In contrast, the essential purpose of central banking is to use government privilege to remove the limitations placed by free banking on monetary and bank credit inflation. The Central Bank is either government-owned and operated, or else especially privileged by the central government. In any case, the Central Bank receives from the government the monopoly privilege for issuing bank notes or cash, while other, privately-owned commercial banks are only permitted to issue demand liabilities in the form of checking deposits.

--Murray N. Rothbard, The Mystery of Banking, 2nd ed. (Auburn, AL: Ludwig von Mises Institute, 2008), 125.