In the U.S., an unsound bank chartered under state law during the period of state banking control (1816–63). Such banks distributed currency backed by questionable securities and were located in inaccessible areas to discourage note redemption. Note circulation by state banks ended with the passage of the National Bank Act of 1863, which provided for the incorporation of national banks and the issue of banknotes on the security of government bonds. The term wildcat bank was later applied to any unstable bank.
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