A Twin Crisis With Multiple Banks of Issue: Spain in the 1860s

40 Pages Posted: 12 Aug 2013

See all articles by Alessio Moro

Alessio Moro

University of Cagliari

Galo Nuño

Banco de España

Pedro Tedde de Lorca

Banco de España - Department of International Economics & International Relations

Date Written: July 2013

Abstract

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

Moro, Alessio and Nuno, Galo and de Lorca, Pedro Tedde, A Twin Crisis With Multiple Banks of Issue: Spain in the 1860s (July 2013). ECB Working Paper No. 1561. Available at SSRN: https://ssrn.com/abstract=2280494

Alessio Moro (Contact Author)

University of Cagliari ( email )

Via S.Ignazio 17
Cagliari
Italy

HOME PAGE: http://economia.unica.it/deca/

Galo Nuno

Banco de España ( email )

Alcala 50
Madrid 28014
Spain

Pedro Tedde De Lorca

Banco de España - Department of International Economics & International Relations ( email )

Alcala 50
Madrid, 28014
Spain

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