The Provision of Liquidity in the Swedish Note Banking System 1878–1901

Per Hortlund
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Per Hortlund: The Ratio Institute, Postal: P.O. Box 5095, SE-102 42 Stockholm, Sweden, http://www.ratio.se

No 62, Ratio Working Papers from The Ratio Institute

Abstract: The working of the ”asset currency” provided by the Swedish note banking system in 1878–1901 is described. Natural and institutional conditions caused the demand for currency to peak in March and September, with troughs in July and January. The paper investigates how the Enskilda banks provided liquidity to solve the problem. This is done by describing how the volume of notes varied over the year, and how other balance sheet items co-moved with them. Strong seasonal co-variation is found particularly between lend-ing and foreign payments media, varying like communicating vessels over the sailing season in May–October (when the sea was ice free and shipments were made).

Keywords: Free banking; Elastic currency; Asset currency; Clearing mechanism; Note competition; Needs of trade; Legal restrictions; Lender of last resort; Sailing season (search for similar items in EconPapers)
JEL-codes: G21 N13 N23 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2005-01-03
New Economics Papers: this item is included in nep-his
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