Early Public Banks

Money and monetary stability in Europe, 1300–1914

“…Frederick the Great's counselor Calzabigi, however, wrote in 1765 that "a ledger-money bank is not allowed under a monarchy because it makes most coin payments unnecessary, and therefore reduces the income from seigniorage". 70…”

Responding to a Shadow Banking Crisis: The Lessons of 1763

“…No receipts were associated with these operations. Moreover, receipts offered the only way to redeem Bank money for trade coins, so accounts alone had many of the characteristics of fiat money (van Dillen , 1964b, Quinn and Roberds ). Receipts were negotiable apart from the underlying deposit, so an account holder without a receipt could usually purchase one on the open market…”

“…This development called into question the integrity of Bank money, which was the basis of valuation in the Amsterdam market. A negative agio had been observed only once before, during the French invasion of 1672 (Quinn and Roberds ), and it explains why the Bank, in consultation with major bankers, suddenly authorized a new repo window for bullion the prior Thursday and started supplying emergency liquidity that same Saturday…”

“…None of these institutions had a lending facility that resembled a modern discount window. See Roberds and Velde () for an introductory survey of early public banks.…”

“…In the eighteenth century, open market transactions were conducted primarily in single‐guilder coins that had no collateral rights at the Bank. Previously, open market operations had been conducted in bullion (Quinn and Roberds ).…”