The Making of a Continental Financial System: Lessons for Europe from Early American History

36 Pages Posted: 2 Jun 2015

Date Written: October 2014

Abstract

Alexander Hamilton was the first U.S. Treasury Secretary from 1789 to 1795. When he started, the Federal Government was in default. During his tenure, U.S. Treasuries became the ultimate safe asset. He successfully managed expectations, achieved debt service reduction, and stabilized financial panics. He delivered sound public finances and financial stability. In the end, the U.S. possessed a modern financial system able to finance innovation and growth. At a time when Europe is working its way out of the sovereign debt crisis and implementing Banking Union and Financial Union, it is worthwhile to search for lessons from early U.S. history.

Keywords: Financial systems, United States, Europe, Public debt, Banking crisis, Crisis management, Public financial management, Financial stability, Political economy, sovereign debt, financial markets, public finances, taxation, foreign debt, fiscal policy

JEL Classification: E10, H12, H63, N11, N21

Suggested Citation

Gaspar, Vitor, The Making of a Continental Financial System: Lessons for Europe from Early American History (October 2014). IMF Working Paper No. 14/183, Available at SSRN: https://ssrn.com/abstract=2613295

Vitor Gaspar (Contact Author)

European Commission ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany
+49 69 1344 7200 (Phone)
+49 69 1344 6575 (Fax)

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