The Acceptability of Money with Multiple Notes Issuers:the Case of Italy (1861-1893)

Fabrizio Mattesini () and Giuseppina Gianfreda
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Fabrizio Mattesini: Università di Roma "Tor Vergata"

No 12100, Working Papers LuissLab from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: We study the Italian monetary regime from 1861 to the creation of the Bank of Italy in 1893. The regime was characterized by a multi- plicity of note issuers although one of them, the BNS, rapidly became the dominant bank of the country following a process of territorial expansion. We carefully describe the evolution of the system and we analyze its functioning by studying the acceptaibility of banknotes. Since by law banknotes had to be redeemed at par, acceptability is measured by the number of days notes were in circulation. We es- timate the acceptability of the BNS notes in the provinces were the bank had branches and we ?nd that the entry of a smaller issuer lim- ited the capacity of the dominant bank to keep its notes in circulation at local level. We take this as evidence that competition in notes issue worked as an e¤ective discipline device and we argue the fall of the sys- tem should not be readily attributed to the failure of the competittive mechanism.

Keywords: money acceptability; notes redemption; multiple issuers. (search for similar items in EconPapers)
JEL-codes: C33 E42 N13 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-his, nep-mac and nep-mon
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