An early stablecoin? The Bank of Amsterdam and the governance of money

Jon Frost, Hyun Song Shin and Peter Wierts

No 902, BIS Working Papers from Bank for International Settlements

Abstract: 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.

Keywords: stablecoins; crypto-assets; central banks; money. (search for similar items in EconPapers)
JEL-codes: E42 E58 N13 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2020-11
New Economics Papers: this item is included in nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

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Working Paper: An early stablecoin? The Bank of Amsterdam and the governance of money (2020)
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