A Twin Crisis With Multiple Banks of Issue: Spain in the 1860s
40 Pages Posted: 12 Aug 2013
Date Written: July 2013
We document the twin crisis that affected Spain in the mid-1860s. First, we trace back its origins to the international crisis of 1864-66. Next, we describe the particular banking sector of Spain, characterized by the coexistence of the Bank of Spain with multiple local banks of issue. We analyze the microeconomic behavior of each bank in response to the crisis and find that, overall, the banks of issue performed well during the crisis. The Bank of Spain resulted as the most destabilizing institute due to its involvement with a Government on the brink of default.
Keywords: sudden stop, lender of last resort, financial crisis, Overend, Gurney and Co.
JEL Classification: N13, N23, E31, E5
Suggested Citation: Suggested Citation