How Amsterdam Got Fiat Money
The authors investigate a fiat money system introduced by the Bank of Amsterdam in 1683. Using data from the Amsterdam Municipal Archives, they partially reconstruct changes in the bank's balance sheet from 1666 through 1702. The 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 with a fiat standard foreshadows later developments in the history of central banking.