Money and Trust: Lessons from the 1620s for Money in the Digital Age

39 Pages Posted: 7 Feb 2018

See all articles by Isabel Schnabel

Isabel Schnabel

University of Bonn - Institute for Financial Economics and Statistics; Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods

Hyun Song Shin

Bank for International Settlements (BIS)

Date Written: February 2018

Abstract

Money is a social convention where one party accepts it as payment in the expectation that others will do so too. Over the ages, various forms of private money have come and gone, giving way to central bank money. The reasons for the resilience of central bank money are of particular interest given current debates about cryptocurrencies and how far they will supplant central bank money. We draw lessons from the role of public deposit banks in the 1600s, which quelled the hyper-in‡flation in Europe during the Thirty Years War (1618-1648). As the precursors of modern central banks, public deposit banks established trust in monetary exchange by making the value of money common knowledge.

Keywords: Gresham's Law; debasement; common knowledge; central banks

JEL Classification: E42, E58, N13

Suggested Citation

Schnabel, Isabel and Shin, Hyun Song, Money and Trust: Lessons from the 1620s for Money in the Digital Age (February 2018). BIS Working Paper No. 698. Available at SSRN: https://ssrn.com/abstract=3119402

Isabel Schnabel (Contact Author)

University of Bonn - Institute for Financial Economics and Statistics ( email )

Adenauerallee 24-42
Bonn, 53113
Germany

HOME PAGE: http://www.finance.uni-bonn.de/schnabel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods ( email )

Kurt-Schumacher-Str. 10
D-53113 Bonn, 53113
Germany
+49-228-9141665 (Phone)
+49-228-9141621 (Fax)

HOME PAGE: http://www.coll.mpg.de/team/page/isabel_schnabel

Hyun Song Shin

Bank for International Settlements (BIS) ( email )

Centralbahnplatz 2
Basel, Basel-Stadt 4002
Switzerland

HOME PAGE: http://www.bis.org/author/hyun_song_shin.htm

Register to save articles to
your library

Register

Paper statistics

Downloads
116
Abstract Views
550
rank
239,182
PlumX Metrics