There has been a significant degree of financial restructuring over the last few decades, which has prompted a rethinking of the first principles of monetary economics. The focus here is on how four specifications of these principles address the question of the desirability of central banks. The case is made for one approach, which advocates central banking as being integral to the logic of credit relations, which in turn are at the heart of monetary systems. It is argued that monetary history demonstrates that monetary standards and central banking have indeed tended to be the outcome of competition in the financial sector. In the past several years a substantial literature has arisen discussing the merits of laissez-faire in the financial services industry and the provision of payments systems. Several comprehensive surveys are available, as in Cowen and Kroszner (1994), Dowd (1993), Selgin and White (1994) and, from a more critical perspective, Smithin (1994) and Trautwein (1993). A number of convergent influences seem to have been responsible for the re-emergence of this debate in the current era.These would include, first, a straightforward extension to the monetary arena of the increasingly popular case for laissez-faire in other areas (Dowd, forthcoming). Second, the rapid pace of technical change, including the computerisation of banking systems and financial markets, seems finally to make possible the substitution of 'sophisticated accounting systems of exchange ' (McCallum, 1985) for conventional monetary systems. For the first time, the Walrasian barter-exchange economy is apparently a potential reality rather than a convenient theoretical abstraction (Smithin, 1994).Finally, theory has developed in response to perceptions of poor performance of existing centralbank-dominated systems (Buchanan and Fand, 1993).One key question which has been widely debated is whether, in some hypothetical deregulated and financially-innovated system, there would be any need for an institution analogous to a central bank, which would be capable of conducting monetary policy. Many authors, particularly in the new monetary economics (NME) and modern free banking (MFB) traditions, think not.Another important issue which has received attention is the feasibility and desirability of separating the traditional functions of money, such as medium of exchange and unit of account. A number of scenarios has been put forward in which a radical separation of the monetary functions is both feasible and economically efficient. This paper puts forward arguments against both of these positions, on the basis of a different monetary-theoretic foundation. According to this alternative perspective, money is essential to the economic process, and 'moneyness' has some of the characteristics of a public good. The practical operation of production and exchange in capitalist economies requires that there be a basic monetary asset which unamibiguously represents the standard of value and is universally acceptable 2 in the ultimate discharge of d...