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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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    2. Patrick K O'Brien & Nuno Palma, 2020. "Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797–1821," European Review of Economic History, Oxford University Press, vol. 24(2), pages 390-426.
    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.
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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.
    6. Charles M. Kahn & Stephen F. Quinn & William Roberds, 2020. "Standing Repo Facilities, Then and Now," Policy Hub 2020-1, Federal Reserve Bank of Atlanta.
    7. Morten Linnemann Bech & Rodney Garratt, 2017. "Central bank cryptocurrencies," BIS Quarterly Review, Bank for International Settlements, September.
    8. Oscar Gelderblom & Joost Jonker, 2013. "Early Capitalism in the Low Countries," Working Papers 0041, Utrecht University, Centre for Global Economic History.
    9. Stephen F. Quinn & William Roberds, 2017. "An Early Experiment with \"Permazero\"," FRB Atlanta Working Paper 2017-5, Federal Reserve Bank of Atlanta.
    10. Peter Wierts & Harro Boven, "undated". "Central Bank Digital Currency - Objectives, preconditions and design choices," DNB Occasional Studies 20-01, Netherlands Central Bank, Research Department.
    11. William Roberds & Francois R. Velde, 2014. "Early Public Banks," Working Paper Series WP-2014-3, Federal Reserve Bank of Chicago.
    12. 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.
    13. 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.
    14. Wilko Bolt & Vera Lubbersen & Peter Wierts, 2022. "Getting the balance right: Crypto, stablecoin and CBDC," Working Papers 736, DNB.
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