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Swedish Riksbank Notes and Enskilda Bank Notes: Lessons for Digital Currencies

Author

Listed:
  • Ben Fung
  • Scott Hendry
  • Warren E. Weber
Abstract
This paper examines the experience of Sweden with government notes and private bank notes to determine how well the Swedish experience corresponds to that of Canada and the United States. Sweden is important to study because it has had government notes in circulation for more than 350 years, and it had government notes before private bank notes. Several differences between the experience of Sweden and that of Canada and the U.S. emerge. (i) Swedish bank notes were safe; in some cases, those of Canada and the U.S. were not. (ii) At certain times, Swedish government notes were not safe; government notes in Canada and the U.S. always were. (iii) Swedish private bank notes were a uniform currency without government intervention. Uniformity required government intervention in Canada and the U.S. (iv) Private notes and government notes coexisted in all three countries until governments took actions to drive private bank notes out of circulation. Using the experience of the three countries, the paper concludes that fiduciary digital currencies will likewise not be perfectly safe without government intervention. Further, the introduction of government digital currency will not drive out existing private digital currencies nor will it preclude private digital currencies from entering the market. Government intervention likely will be required for private and government digital currencies to be a uniform currency.

Suggested Citation

  • Ben Fung & Scott Hendry & Warren E. Weber, 2018. "Swedish Riksbank Notes and Enskilda Bank Notes: Lessons for Digital Currencies," Staff Working Papers 18-27, Bank of Canada.
  • Handle: RePEc:bca:bocawp:18-27
    as

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    File URL: https://www.bankofcanada.ca/wp-content/uploads/2018/06/swp2018-27.pdf
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    References listed on IDEAS

    as
    1. Engdahl, Torbjörn & Ögren, Anders, 2008. "Multiple paper monies in Sweden 1789–1903: substitution or complementarity?," Financial History Review, Cambridge University Press, vol. 15(1), pages 73-91, April.
    2. Ben Fung & Scott Hendry & Warren E. Weber, 2017. "Canadian Bank Notes and Dominion Notes: Lessons for Digital Currencies," Staff Working Papers 17-5, Bank of Canada.
    3. Douglas W. Diamond & Philip H. Dybvig, 2000. "Bank runs, deposit insurance, and liquidity," Quarterly Review, Federal Reserve Bank of Minneapolis, vol. 24(Win), pages 14-23.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. James Chapman & Carolyn A. Wilkins, 2019. "Crypto ‘Money’: Perspective of a Couple of Canadian Central Bankers," Discussion Papers 2019-1, Bank of Canada.

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    More about this item

    Keywords

    Bank notes; Digital Currencies; Financial services;
    All these keywords.

    JEL classification:

    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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