, Volume 9, Issue 1, pp 1–25 | Cite as

Adverse clearings in a monetary system with multiple note issuers: the case of Italy (1861–1893)

  • Giuseppina GianfredaEmail author
  • Fabrizio Mattesini
Original Paper


We study the regime of multiple note issuers that characterized the Italian monetary system from the unification of Italy in 1861 to the creation of the Bank of Italy in 1893. We describe how the system evolved and we analyze how it functioned by studying the clearing of notes among banks. Since by law banknotes had to be redeemed at par, we focus on the ability of banks to keep notes in circulation before redemption. We estimate adverse clearings of notes issued by the dominant bank [Banca Nazionale degli Stati Sardi (BNS)] in the provinces where this bank had branches and we find that the entry of a smaller issuer limited the BNS’s capacity to keep its notes in circulation at the local level. We take this as evidence that competition in note issuance worked as an effective discipline device. Our results are consistent with the analysis of Pareto (Journal des économistes 3–28, 1893) who maintained that the fall of the Italian system was not due to the failure of the competitive mechanism, but rather to the altering of the rules of the game by the government.


Adverse clearings Par redemption Competing monies 

JEL Classification

E42 N13 C33 



We thank Dario Antiseri, Nathalie Janson, Giovanna Vallanti and two anonymous referees for their helpful comments. We also thank the P. Baffi Library of the Bank of Italy for the support in collecting the data.


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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  1. 1.Università della TusciaViterboItaly
  2. 2.Università di Roma “Tor Vergata”RomeItaly

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