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How Amsterdam got fiat money

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  • Quinn, Stephen
  • Roberds, William

Abstract

A fiat money system was introduced in the seventeenth century by a prominent public bank of the time, the Bank of Amsterdam. Employing data from the bank׳s archives, we show that bank money became a more attractive transactions medium following a 1683 policy change, which unbundled the bank׳s account balances from a right to redeem these balances in coin. Balances not matched by a redemption right became fiat. This change also stabilized the value of bank money as a unit of account, freed the bank from defensive open market operations, and promoted seigniorage collection.

Suggested Citation

  • Quinn, Stephen & Roberds, William, 2014. "How Amsterdam got fiat money," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 1-12.
    • Handle: RePEc:eee:moneco:v:66:y:2014:i:c:p:1-12
    DOI: 10.1016/j.jmoneco.2014.03.004
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    1. Fiat money, 1683
      by Economic Logician in Economic Logic on 2011-02-11 21:24:00

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    5. Calomiris, Charles W. & Flandreau, Marc & Laeven, Luc, 2016. "Political foundations of the lender of last resort: A global historical narrative," Journal of Financial Intermediation, Elsevier, vol. 28(C), pages 48-65.
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    10. Michael D. Bordo & William Roberds, 2022. "Central Bank Digital Currencies: An Old Tale with a New Chapter," FRB Atlanta Working Paper 2022-18, Federal Reserve Bank of Atlanta.
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    16. Stephen Quinn & William Roberds, 2014. "The Bank of Amsterdam Through the Lens of Monetary Competition," Financial and Monetary Policy Studies, in: Peter Bernholz & Roland Vaubel (ed.), Explaining Monetary and Financial Innovation, edition 127, pages 283-300, Springer.
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