Stephen Quinn and William Roberds
Working Paper 2012-14
September 2012

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In 1683 the Bank of Amsterdam introduced a form of fiat money that successfully competed with the coinage of the time. We argue that the principal motive for this monetary innovation was the uncertain value of coins circulating within the Dutch Republic. The Bank's fiat money regime persisted until the downfall of the Dutch Republic in 1795 and incorporated modern features such as gross settlement of financial obligations, open market operations, central bank repurchase agreements (the equivalent thereof), and emergency liquidity facilities.

JEL classification: E42, E58, N14

Key words: fiat money, central bank, monetary competition

This paper was prepared for the conference "The Political Economy of Monetary Innovation," held in Heidelberg, Germany, August 9–12, 2012. The authors are grateful to the conference organizers, Peter Bernholz and Roland Vaubel, as well as to conference participants for comments on an earlier draft. The views expressed here are the authors' and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.

Please address questions regarding content to Stephen Quinn, Department of Economics, Texas Christian University, TCU Box 298510, 2855 Main Drive, Fort Worth, TX 76129, 817-257-6234,, or William Roberds, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, N.E., Atlanta, GA 30309-4470, 404-498-8970,

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