The Making of a National Currency. Spatial Transaction Costs and Money Market Integration in Spain (1825-1874)

36 Pages Posted: 1 Dec 2017 Last revised: 21 Jan 2019

See all articles by Nektarios Aslanidis

Nektarios Aslanidis

Universitat Rovira Virgili

Alfonso Herranz‐Loncán

University of Barcelona

Pilar Nogues-Marco

University of Geneva

Date Written: November 2017


This article analyses the integration of the Spanish money market in the 19th century. We use a Band-TAR model of prices of bills of exchange in 10 Spanish cities to measure convergence and efficiency in the market between 1825 and 1875. While price gaps generally decreased during the period, progress in efficiency was concentrated in a small group of cities. We suggest that increasing convergence was associated to the reduction in transaction costs, which started before the railways and the telegraph through improvements in roads and postal services. By contrast, the heterogeneous behavior of efficiency might have been largely associated to changes in the economic geography of Spain and their effects on the monetary market leadership structure.

Keywords: Bills of Exchange, Financial Development, Money Market Convergence, Money Market Efficiency, Money Market Integration, Spanish National Currency, Specie-Point Mechanism, transaction costs

JEL Classification: E02, E42, F02, F15, F31, F36, K00, L10, N13, N73,

Suggested Citation

Aslanidis, Nektarios and Herranz-Loncan, Alfonso and Nogues-Marco, Pilar, The Making of a National Currency. Spatial Transaction Costs and Money Market Integration in Spain (1825-1874) (November 2017). CEPR Discussion Paper No. DP12453, Available at SSRN:

Nektarios Aslanidis (Contact Author)

Universitat Rovira Virgili ( email )


Alfonso Herranz-Loncan

University of Barcelona ( email )

Gran Via de les Corts Catalanes, 585
Barcelona, 08007

Pilar Nogues-Marco

University of Geneva ( email )

102 Bd Carl-Vogt
Genève, CH - 1205

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