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How Amsterdam got fiat money

Listed author(s):
  • Quinn, Stephen
  • Roberds, William

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.

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Article provided by Elsevier in its journal Journal of Monetary Economics.

Volume (Year): 66 (2014)
Issue (Month): C ()
Pages: 1-12

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Handle: RePEc:eee:moneco:v:66:y:2014:i:c:p:1-12
DOI: 10.1016/j.jmoneco.2014.03.004
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505566

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