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Pre-industrial Bimetallism: The Index Coin Hypothesis


  • Ernst Juerg Weber

    (UWA Business School, The University of Western Australia)


In early monetary systems the unit of account was separate from the medium of exchange. Commodity prices and prices of coins were quoted in terms of a fixed quantity of metal that was embodied by an 'index coin'. Coins circulated at their metal value because coinage was imperfect and fixed exchange rates would have interfered with the operation of bimetallism. An indication that the exchange rates of coins were market determined is the absence of value marks on coins. During the Industrial Revolution, improvements in the quality of coinage led to the fusion of the unit of account and medium of exchange function of money. As a consequence, pre-industrial bimetallism gave way to nineteenth century bimetallism, in which the make of currencies alternated between silver and gold.

Suggested Citation

  • Ernst Juerg Weber, 2009. "Pre-industrial Bimetallism: The Index Coin Hypothesis," Economics Discussion / Working Papers 09-12, The University of Western Australia, Department of Economics.
  • Handle: RePEc:uwa:wpaper:09-12

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    Blog mentions

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    1. Separating the functions of money—the case of Medieval coinage
      by JP Koning in Moneyness on 2013-09-13 21:45:00


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    1. repec:spr:cliomt:v:11:y:2017:i:3:d:10.1007_s11698-016-0146-5 is not listed on IDEAS
    2. Peter Kugler, 2011. "Financial Market Integration in Late Medieval Europe: Results from a Threshold Error Correction Model for the Rhinegulden and Basle Pound 1365-1429," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 147(III), pages 337-352, September.
    3. Tschoegl, Adrian E., 2010. "The international diffusion of an innovation: The spread of decimal currency," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 100-109, January.

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