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Death of a Reserve Currency

Author

Listed:
  • Stephen Quinn

    (Texas Christian University)

  • William Roberds

    (Federal Reserve Bank of Atlanta)

Abstract
The Dutch bank florin was the dominant currency in Europe over much of the seventeenth and eighteenth centuries. The florin, a fiat money, was managed by an early central bank, the Bank of Amsterdam. We analyze the florin’s loss of “reserve currency” status over the period 1781–92, using a new reconstruction of the Bank’s balance sheet. The reconstruction shows that by 1784, accommodative policies rendered the Bank policy insolvent, meaning that its net worth would have been negative under continuation of its policy objectives. Policy insolvency coincided with the Bank’s loss of control over the value of its money.

Suggested Citation

  • Stephen Quinn & William Roberds, 2016. "Death of a Reserve Currency," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 63-103, December.
    • Handle: RePEc:ijc:ijcjou:y:2016:q:4:a:2
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    References listed on IDEAS

    as
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    Citations

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    Cited by:

    1. Patrick K O'Brien & Nuno Palma, 2020. "Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797–1821," European Review of Economic History, European Historical Economics Society, vol. 24(2), pages 390-426.
    2. Stephen Quinn & William Roberds, 2016. "Death of a Reserve Currency," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 63-103, December.
    3. Ashwath Komath, 2022. "Bancor Comes of Age: A Case for an Indian Bitcoin Reserve," India Quarterly: A Journal of International Affairs, , vol. 78(1), pages 121-142, March.
    4. Patrick K. O’Brien & Nuno Palma, 2019. "Danger To The Old Lady Of Threadneedle Street? The Bank Restriction Act And The Regime Shift To Paper Money, 1797-18211," Working Papers 0082, Utrecht University, Centre for Global Economic History.
    5. Michael D. Bordo & William Roberds, 2022. "Central Bank Digital Currencies: An Old Tale with a New Chapter," FRB Atlanta Working Paper 2022-18, Federal Reserve Bank of Atlanta.
    6. Pierpaolo Benigno & Salvatore Nisticò, 2020. "Non-neutrality of Open-Market Operations," American Economic Journal: Macroeconomics, American Economic Association, vol. 12(3), pages 175-226, July.
    7. Stephen F. Quinn & William Roberds, 2017. "An Early Experiment with \"Permazero\"," FRB Atlanta Working Paper 2017-5, Federal Reserve Bank of Atlanta.
    8. Michael D. Bordo & William Roberds, 2024. "Central Bank Digital Currencies: An Old Tale with a New Chapter," Working Papers 323, Princeton University, Department of Economics, Center for Economic Policy Studies..
    9. Daniel Fried, 2023. "The U.S. Dollar as an International Currency and Its Economic Effects: Working Paper 2023-04," Working Papers 58764, Congressional Budget Office.
    10. Del Negro, Marco & Sims, Christopher A., 2015. "When does a central bank׳s balance sheet require fiscal support?," Journal of Monetary Economics, Elsevier, vol. 73(C), pages 1-19.
    11. Spahn, Peter, 2018. "Was war falsch am Merkantilismus?," Hohenheim Discussion Papers in Business, Economics and Social Sciences 26-2018, University of Hohenheim, Faculty of Business, Economics and Social Sciences.
    12. Stefano Ugolini, 2018. "The Historical Evolution of Central Banking," Post-Print hal-01887004, HAL.
    13. Wilko Bolt & Vera Lubbersen & Peter Wierts, 2022. "Getting the balance right: Crypto, stablecoin and CBDC," Working Papers 736, DNB.
    14. Sarah Bell & Jon Frost & Boris Hofmann & Damiano Sandri & Hyun Song Shin, 2024. "Central bank capital and trust in money: lessons from history for the digital age," BIS Papers, Bank for International Settlements, number 146.

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    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • N13 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: Pre-1913

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