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Atlanta Fed Working Papers


The Big Problem of Large Bills: The Bank of Amsterdam and the Origins of Central Banking

Stephen Quinn and William Roberds
Working Paper 2005-16
August 2005

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This paper outlines a model of the first true central bank, the Bank of Amsterdam, founded in 1609. Employing a variant of the Freeman (1996) model of money and payments, we first analyze the problematic monetary situation in the Netherlands prior to the founding of the Bank. We then use the model to describe how the Bank could remedy this situation by creating a stable medium for the settlement of commercial obligations.

JEL classification: E420, E520, N130

Key words: money, central banks, coinage, debasement


The views expressed here are the authors’ and are not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors’ responsibility.

Please address questions regarding content to Stephen Quinn, Department of Economics, Texas Christian University, Department of Economics, TCU Box 298510, Texas Christian University, Fort Worth, Texas 76129, s.quinn@tcu.edu, or William Roberds, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, Georgia 30309-4470, 404-498-8970, william.roberds@atl.frb.org.

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