Pre-industrial Bimetallism: The Index Coin Hypothesis
AbstractIn early monetary systems the unit of account was separate from the medium of exchange. Commodity prices and prices of coins were quoted in terms of a fixed quantity of metal that was embodied by an 'index coin'. Coins circulated at their metal value because coinage was imperfect and fixed exchange rates would have interfered with the operation of bimetallism. An indication that the exchange rates of coins were market determined is the absence of value marks on coins. During the Industrial Revolution, improvements in the quality of coinage led to the fusion of the unit of account and medium of exchange function of money. As a consequence, pre-industrial bimetallism gave way to nineteenth century bimetallism, in which the make of currencies alternated between silver and gold.
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Bibliographic InfoPaper provided by The University of Western Australia, Department of Economics in its series Economics Discussion / Working Papers with number 09-12.
Length: 29 pages
Date of creation: 2009
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- Tschoegl, Adrian E., 2010. "The international diffusion of an innovation: The spread of decimal currency," The Journal of Socio-Economics, Elsevier, vol. 39(1), pages 100-109, January.
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