The Big Problem of Large Bills: The Bank of Amsterdam and the Origins of Central Banking
56 Pages Posted: 11 Oct 2005 Last revised: 23 Feb 2015
Date Written: August 2005
This paper outlines a model of the first true central bank, the Bank of Amsterdam, founded in 1609. Employing a variant of the Freeman (1996) model of money and payments, we first analyze the problematic monetary situation in the Netherlands prior to the founding of the Bank. We then use the model to describe how the Bank could remedy this situation by creating a stable medium for the settlement of commercial obligations.
Keywords: money, central banks, coinage, debasement
JEL Classification: E42, E52, N13
Suggested Citation: Suggested Citation