Recent Developments in Bimetallic Theory

Abstract

After almost a century of neglect, the past few years have seen a revival of interest in bimetallism as a subject of study. Paradoxically, until a few years ago the monetary system that dominated the post-Medieval world had received little attention in the modern professional economic literature. Bimetallism had mostly been seen as an unstable precursor of the gold standard, subjecting economies to unnecessary — and possibly costly — periodic recoinages. The system’s interesting dynamics were usually summarised by a reference to Gresham’s Law, or ‘good money drives out bad money.’ Recently, a more sophisticated understanding of the system has emerged and its merits have been reappraised.