Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797-1821

Patrick K. O’Brien and Nuno Palma
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Patrick K. O’Brien: London School of Economics

No 100, Working Papers from European Historical Economics Society (EHES)

Abstract: The Bank Restriction Act of 1797 suspended the convertibility of the Bank of England's notes into gold. The current historical consensus is that the suspension was a result of the state's need to finance the war, France’s remonetization, a loss of confidence in the English country banks, and a run on the Bank of England’s reserves following a landing of French troops in Wales. We argue that while these factors help us understand the timing of the Restriction period, they cannot explain its success. We deploy new long-term data which leads us to a complementary explanation: the policy succeeded thanks to the reputation of the Bank of England, achieved through a century of prudential collaboration between the Bank and the Treasury.

Keywords: Bank of England; financial revolution; fiat money; money supply; monetary policy commitment; reputation; and time-consistency; regime shift; financial sector growth (search for similar items in EconPapers)
JEL-codes: N13 N23 N43 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2016-07
New Economics Papers: this item is included in nep-cse, nep-his and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797–1821 (2020)
Working Paper: Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the Regime Shift to Paper Money, 1797-1821 (2018)
Working Paper: Danger to the old lady of Threadneedle Street? The Bank Restriction Act and the regime shift to paper money, 1797-1821 (2017)
Working Paper: Danger to the Old Lady of Threadneedle Street? The Bank Restriction Act and the Regime Shift to Paper Money, 1797-1821 (2016)
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