Template-Type: ReDIF-Paper 1.0
Author-Name: Jon Frost
Author-X-Name-First: Jon 
Author-X-Name-Last: Frost
Author-Name:  Hyun Song Shin
Author-X-Name-First: Hyun Song
Author-X-Name-Last: Shin
Author-Name: Peter Wierts
Author-X-Name-First: Peter 
Author-X-Name-Last: Wierts
Title: An early stablecoin? The Bank of Amsterdam and the governance of money
Abstract: This paper draws lessons on the central bank underpinnings of money from the rise and fall of the Bank of Amsterdam (1609-1820). The Bank started out as a "stablecoin": it issued deposits backed by silver and gold coins, and settled payments by transfers across deposits. Over time, it performed functions of a modern central bank and its deposits took on attributes of fiat money. The economic shocks of the 1780s, large-scale lending and lack of fiscal support led to its failure. Using monthly balance sheet data, we show how confidence in Bank money gave way to a run equilibrium, where the fall of the premium on deposits over coins ("agio") into negative territory was swift and precipitous. This holds lessons for the governance of digital money.
Length: 45 pages
Creation-Date: 2020-11
File-URL: https://www.bis.org/publ/work902.pdf
File-Format: Application/pdf
File-Function: Full PDF document
File-URL: https://www.bis.org/publ/work902.htm
File-Format: text/html
Number: 902
Keywords: stablecoins, crypto-assets, central banks, money.
Classification-JEL: E42, E58, N13
Handle: RePEc:bis:biswps:902