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Early Public Banks

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  • Francois R. Velde
  • William Roberds

Abstract

Publicly owned or commissioned banks were common in Europe from the fifteenth century. This survey argues that while the early public banks were characterized by great experimentation in their design, a common goal was to create a liquid and reliable monetary asset in environments where such assets were rare or unavailable. The success of these banks was however never guaranteed, and even well-run banks could become unstable over time as their success made them susceptible to fiscal exploitation. The popularization of bearer notes in the eighteenth century broadened the user base for the public banks? money but was also accompanied by increased fiscal abuse. Wartime demands of the Napoleonic Era resulted in the reorganization or dissolution of many early public banks. A prominent exception was the Bank of England, whose adept management of a fiscally backed money provided a foundation for the development of central banks as they exist today.

Suggested Citation

  • Francois R. Velde & William Roberds, 2014. "Early Public Banks," Working Paper Series WP-2014-3, Federal Reserve Bank of Chicago, revised 11 Feb 2014.
    • Handle: RePEc:fip:fedhwp:wp-2014-03
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    References listed on IDEAS

    as
    1. Stephen F. Quinn & William Roberds, 2006. "An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange, and the emergence of the first central bank," FRB Atlanta Working Paper 2006-13, Federal Reserve Bank of Atlanta.
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    More about this item

    Keywords

    Central banks; public banks; exchanges bank;

    JEL classification:

    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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