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Atlanta Fed Working Papers


An Economic Explanation of the Early Bank of Amsterdam, Debasement, Bills of Exchange, and the Emergence of the First Central Bank

Stephen Quinn and William Roberds
Working Paper 2006-13
September 2006

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The Bank of Amsterdam, founded in 1609, was the first public bank to offer accounts not directly convertible to coin. As such, it can be described as the first true central bank. The debut of central bank money did not result from any conscious policy decision, however, but instead arose almost by accident, in response to the chaotic monetary conditions during the early years of the Dutch Republic. This paper examines the history of this momentous development from the perspective of modern monetary theory.

JEL classification: E420, E520, N130

Key words: money, central banks, coinage, debasement


This paper was prepared for the conference on “The Origin and Development of Financial Markets and Institutions,” held in honor of the retirement of Professor Larry Neal, University of Illinois, April 28–29, 2006. The authors thank Jeremy Attack, Joost Jonker, Charles Kahn, Larry Neal, Francois Velde, and David Weiman for comments on an earlier draft, Oscar Gelderbloom for tips on numerous references, and especially M.S. Polak for sharing volume 2 of his book Historiografie En Economie Van De “Muntchaos.” The views expressed here are the authors’ and 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 William Roberds, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, NE, Atlanta, GA 30309-4470, 404-498-8970, william.roberds@atl.frb.org, or Stephen Quinn, Texas Christian University, Department of Economics, TCU Box 298510, Fort Worth, TX 76129, s.quinn@tcu.edu.

For further information, contact the Public Affairs Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, Georgia 30309-4470, 404-498-8020.