'An early stablecoin? The Bank of Amsterdam and the governance of money'
|Date||21 September 2021|
This paper draws lessons on the central bank underpinnings of money from the rise and fall of the Bank of Amsterdam (1609-1820). The Bank started out as a "stablecoin": it issued deposits backed by silver and gold coins, and settled payments by transfers across deposits. Over time, it performed functions of a modern central bank and its deposits took on attributes of fiat money. The economic shocks of the 1780s, large-scale lending and lack of fiscal support led to its failure. Using monthly balance sheet data, we show how confidence in Bank money gave way to a run equilibrium, where the fall of the premium on deposits over coins ("agio") into negative territory was swift and precipitous. This holds lessons for the governance of digital money.
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Peter Wierts is senior economist at the payments and market infrastructures division of the Dutch central bank. He focuses on the effects of digitalisation, including central bank digital currency (CBDC). Peter holds a part-time position as associate professor of finance at VU University Amsterdam, where he teaches Financial Sector Regulation. Previously, he worked at the European Commission and the Dutch Ministry of Finance. He holds a PhD from the University of Reading. Peter has published extensively on policy-oriented topics, e.g. in Journal of Money Credit and Banking, Economic Policy and the International Journal of Central Banking.
The Amsterdam Center for Law and Economics (ACLE) is a joint initiative of the Faculty of Economics and Business and the Faculty of Law at the University of Amsterdam. The objective of the ACLE is to promote high-quality interdisciplinary research at the intersection between law and economics.