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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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    Cited by:

    1. Stephen Quinn & William Roberds, 2015. "Responding to a Shadow Banking Crisis: The Lessons of 1763," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(6), pages 1149-1176, September.
    2. Hiroshi Fujiki, 2014. "Japanese Money Demand from the Regional Data: An Update and Some Additional Results," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 32, pages 45-102, November.
    3. Stephen Quinn & William Roberds, 2016. "Death of a Reserve Currency," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 63-103, December.
    4. Giorgia Piacentino & Anjan Thakor & Jason Donaldson, 2016. "Warehouse Banking," 2016 Meeting Papers 588, Society for Economic Dynamics.
    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.
    6. repec:bis:bisqtr:1709f is not listed on IDEAS
    7. Stephen F. Quinn & William Roberds, 2012. "The Bank of Amsterdam through the lens of monetary competition," FRB Atlanta Working Paper 2012-14, Federal Reserve Bank of Atlanta.
    8. Roberds, William & Velde, Francois R., 2014. "Early Public Banks," FRB Atlanta Working Paper 2014-9, Federal Reserve Bank of Atlanta.
    9. Anna Kovner & David R. Skeie, 2013. "Evaluating the quality of fed funds lending estimates produced from Fedwire payments data," Staff Reports 629, Federal Reserve Bank of New York.
    10. Oscar Gelderblom & Joost Jonker, 2013. "Early Capitalism in the Low Countries," Working Papers 0041, Utrecht University, Centre for Global Economic History.
    11. Quinn, Stephen F. & Roberds, William, 2017. "An Early Experiment with "Permazero"," FRB Atlanta Working Paper 2017-5, Federal Reserve Bank of Atlanta.
    12. Isabel Schnabel & Hyun Song Shin, 2018. "Money and trust: lessons from the 1620s for money in the digital age," BIS Working Papers 698, Bank for International Settlements.

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