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

Economics Discussion Paper Series from Economics, The University of Manchester

Abstract: The Bank Restriction Act of 1797 was the unconventional monetary policy of its time. It suspended the convertibility of the Bank of England's notes into gold, a policy which lasted until 1821. 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.

JEL-codes: N13 N23 N43 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (2)

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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 (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)
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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Persistent link: https://EconPapers.repec.org/RePEc:man:sespap:1808

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