Dutch Treat: The Netherlands’ Exorbitant Privilege in the Eighteenth Century

Stein Berre and Asani Sarkar

No 20251007, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: The term “exorbitant privilege” emerged in the 1960s to describe the advantages derived by the U.S. economy from the dollar’s status as the de facto global reserve currency. In this post, we examine the exorbitant privilege that accrued to the Netherlands in the eighteenth century, when the Dutch guilder enjoyed global reserve currency status. We show how the private actions of financial institutions created and maintained this privilege, even in the absence of a central bank. While privilege benefited the Dutch financial system in many ways, it also laid the seeds of later financial crisis.

Keywords: exorbitant privilege; reserve currency; Netherlands; eighteenth century (search for similar items in EconPapers)
JEL-codes: N13 N23 (search for similar items in EconPapers)
Date: 2025-10-07
New Economics Papers: this item is included in nep-fdg, nep-his and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:101924

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DOI: 10.59576/lse.20251007

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