How successful was Germany's first common currency? A new look at the imperial monetary union of 1559

Oliver Volckart

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: The paper starts out from the insight that success or failure of the common currency, on which the diet of the Holy Roman Empire agreed in 1559, cannot be assessed against how modern currencies are functioning. Rather, the benchmark is provided by historical criteria, primarily by the aims of the political authorities that joined the union. The analysis finds that there were two overriding aims: 1) preventing high-ranking economic agents from exploiting their social standing in order to push up prices and rents, and 2) removing the conditions that allowed Gresham’s Law to undermine monetary stability. The participants in the union tried to reach the first aim by retaining regional small change in addition to the Empire-wide larger units. While there is limited evidence for the common currency preventing the functioning of Gresham’s Law within the Empire up to the immediate run-up to the Thirty Years War (1618-48), it failed to prevent inflation and the inflow of foreign coinage. However, in neither respect the post1559 Empire differed from other contemporary polities. On balance, therefore, the Empire’s common currency can be considered a success.

Keywords: currency unions; early modern monetary policies; Gresham's Law (search for similar items in EconPapers)
JEL-codes: E42 E52 N13 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2022-04
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:115007

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