An early stablecoin? The Bank of Amsterdam and the governance of money

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.

Keywords: stablecoins; crypto-assets; central banks; money
JEL codes E42; E58; N13

Working paper no. 696