Money and trust: lessons from the 1620s for money in the digital age

Isabel Schnabel and Hyun Song Shin

No 698, BIS Working Papers from Bank for International Settlements

Abstract: Money is a social convention where one party accepts it as payment in the expectation that others will do so too. Over the ages, various forms of private money have come and gone, giving way to central bank money. The reasons for the resilience of central bank money are of particular interest given current debates about cryptocurrencies and how far they will supplant central bank money. We draw lessons from the role of public deposit banks in the 1600s, which quelled the hyper-in‡flation in Europe during the Thirty Years War (1618-1648). As the precursors of modern central banks, public deposit banks established trust in monetary exchange by making the value of money common knowledge.

Keywords: Gresham's Law; debasement; common knowledge; central banks (search for similar items in EconPapers)
JEL-codes: E42 E58 N13 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2018-02
New Economics Papers: this item is included in nep-his, nep-hpe, nep-mac, nep-mon, nep-pay and nep-soc
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Citations: View citations in EconPapers (17)

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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:698

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