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The Early Days of the Federal Reserve

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Abstract

The Bank of Amsterdam (Amsterdamsche Wisselbank) is considered to be the forerunner of modern central banks. It was established in 1609 in Amsterdam when it was part of the Republic of the Seven United Provinces; the United Provinces had formed when Netherlands had seceded from Spanish rule in the late sixteenth century. The Bank of Amsterdam performed some of the activities associated with modern central banks. This was a time when Europe was fractured into many small states whose currency typically traded at a discount, and the Bank of Amsterdam accepted deposits in these myriad currencies and credited the depositors in what was known as “bank money,” which traded at a premium. The bank closed its doors as a result of providing large and risky loans to the local government of Amsterdam and the Dutch East India Company and committing other financial improprieties in 1819, just a few years after the creation of the Kingdom of the Netherlands in March of 1815.

Keywords

  • Monetary Policy
  • Central Bank
  • Federal Reserve
  • Money Supply
  • Federal Reserve System

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© 2014 Ranajoy Ray Chaudhuri

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Chaudhuri, R.R. (2014). The Early Days of the Federal Reserve. In: The Changing Face of American Banking. Palgrave Macmillan, New York. https://doi.org/10.1057/9781137361219_5

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