Search Results
Showing results 1 to 10 of approximately 73.
(refine search)
Working Paper
Death of a Reserve Currency
The Dutch bank florin was the dominant currency in Europe during much of the 17th and 18th centuries. The florin, a fiat money, was managed by an early central bank, the Bank of Amsterdam. Using a new reconstruction of the Bank of Amsterdam's balance sheet, we analyze the florin's loss of reserve currency status during the period 1781?92. The reconstruction shows that by 1784, accommodative policies rendered the Bank of Amsterdam "policy insolvent," meaning that its net worth would have been negative under continuation of its policy objectives. Policy insolvency coincided with the Bank of ...
Journal Article
What's really new about the new forms of retail payment?
Rapid developments in technology have brought about new methods of retail payment-such as remote banking, electronic cash, and debit, stored-value, and smart cards-that were unavailable a decade ago. Some observers believe that these alternative payment methods will differ from traditional methods not only in a technological but also in an economic sense and will alter how consumers and businesses interact. ; This article examines the question of whether, from the standpoint of economic theory, there is or will likely be anything new about these new forms of payment. The author describes some ...
Journal Article
The evolution of the check as a means of payment: a historical survey
Though checks' popularity is now waning in favor of electronic payments, checks were, for much of the twentieth century, the most widely used noncash payment method in the United States. How did such a relatively inefficient form of payment become so dominant? This article traces the historical evolution of the check, focusing on its relation to complementary and competing payment technologies. ; Originating in the eastern Mediterranean during the first millennium as a convenient form of payment between local merchants, checks became more versatile through the development of negotiability in ...
Working Paper
How Amsterdam got fiat money
We investigate a fiat money system introduced by the Bank of Amsterdam in 1683. Using data from the Amsterdam Municipal Archives, we partially reconstruct changes in the bank's balance sheet from 1666 through 1702. Our calculations show that the Bank of Amsterdam, founded in 1609, was engaged in two archetypal central bank activities?lending and open market operations?both before and after its adoption of a fiat standard. After 1683, the bank was able to conduct more regular and aggressive policy interventions, from a virtually nonexistent capital base. The bank's successful experimentation ...
Working Paper
Early Public Banks
Publicly owned or commissioned banks were common in Europe from the 15th century. This survey argues that while the early public banks were characterized by great experimentation in their design, a common goal was to create a liquid and reliable monetary asset in environments where such assets were rare or unavailable. The success of these banks was, however, never guaranteed, and even well-run banks could become unstable over time as their success made them susceptible to fiscal exploitation. The popularization of bearer notes in the 18th century broadened the user base for the public banks' ...
Journal Article
The impact of fraud on new methods of retail payment
Currency fraud (counterfeiting), check fraud, and credit card fraud are serious problems, costing the U.S. economy billions of dollars each year. But with each of these traditional payments methods, the problem of fraud has been kept at a manageable level. To be successful in the marketplace, newer forms of payment such as electronic cash and stored-value cards will need to hold fraud risk to similarly low levels. ; Will fraud hinder development of the new payments media? The natural advantages of electronic systems for storing, copying, and manipulating data can be a drawback when it comes ...
Journal Article
Money and the economy: puzzles from the 1980's experience
Report
The quantitative significance of the Lucas critique
Doan, Litterman, and Sims (DLS) have suggested using conditional forecasts to do policy analysis with Bayesian vector autoregression (BVAR) models. Their method seems to violate the Lucas critique, which implies that coefficients of a BVAR model will change when there is a change in policy rules. In this paper we construct a BVAR macro model and attempt to determine whether the Lucas critique is important quantitatively. We find evidence following two candidate policy rule changes of significant coefficient instability and of a deterioration in the performance of the DLS method.
Journal Article
The Fed and Its Shadow: A Historical View
Central bank policies have always incorporated both a discretionary or active component and a passive component. Successful central banking has required a coordination of the two components. After a period of apparent dormancy, the passive component of monetary policy has emerged from the shadows and become relevant for Federal Reserve policy today.