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2015 | OriginalPaper | Buchkapitel

1. Introduction

verfasst von : Roland Uittenbogaard

Erschienen in: Evolution of Central Banking?

Verlag: Springer International Publishing

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Abstract

On March 25 2014 it will be 200 years ago that King Willem I established De Nederlandsche Bank. DNB is one of the five oldest central banks still existing in the world: only the Swedish Riksbank, the Bank of England, Banque de France and Suomen Pankki are older. As a central bank, nowadays, DNB is no longer extraordinary; quite the contrary, central banks are a ubiquitous phenomenon. There is hardly a country in the world that does not have its own central bank, which could easily give rise to the idea that central banks are inevitable. Economic discourse has come to focus on what a central bank should do, rather than asking a priori the question of why there is central bank at all. This is just the question that was posed by the ‘free banking school’. Proponents of free banking argue that the existence of central banks is at the very core of the problem of monetary and financial instability, instead of helping to solve these problems. The argument made by the free banking school is outlined in more detail in Chap. 2. Here my main point is that the question of why central banks exist has relevance.

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Nächstes Kapitel Theories on the Emergence and Development of Central Banking

The literature is abundant, see for instance, Bordo and MacDonald (1997). The point here is not about whether the gold standard worked automatically or not, the point is that central banks are key players in the game, whether exercising discretion or not.

Capie et al. (1994), p. 10.

Later volumes of the Geschiedenis van de Nederlandsche Bank were written by J. de Vries (covering the period 1914–1945) and M.M.G. Fase (covering the period from 1945 to 1971). The continuation under the same title seems to imply that an official history only needs to be written once, which would suggest a rather naïve view on historiography.

Kymmell (1992) and Wijtvliet (1993), pp. 37–105.

De Vries and Van der Woude even argue that the Dutch economy was the first ‘modern’ economy. de Vries and Van der Woude (1994).

van Zanden and van Riel (2000), pp. 196–199, for instance, show that rising government debt tended to increase interest rates, which had been denied by Jonker (1996), p. 89, who pointed to the ease with which the Amsterdam market absorbed issues of new loans (foreign and domestic).

See, for instance, Chapter 2: Roles and objectives of modern central banks. In: BIS (2009).

Ugolini (2011) warns against an institutional distortion in the literature and argues for functional approach.

Capie et al. (1994), p. 5.

Chapter 2 further elaborates on the theories on the development of central banking, here the main elements of our central question are outlined.

White (1989), pp. 3–5.

Flandreau (2006).

See for instance, Obstfeld et al. (2004).

Recent literature on the Amsterdam Bank of Exchange has pointed out that this institution did indeed pursue monetary policy objectives and did try to shield the real economy from monetary shocks. See: Quinn and Roberds (2007) and Dehing (2012). This raises the question of how that was possible given the constraint that free capital flows, fixed exchange rates and independent monetary policy cannot coexist. The best way to understand this, I think, is that the Bank of Exchange introduced an additional or complementary money with a flexible exchange rate to other money. The important change that took place in the nineteenth century, was that bank money (bank notes and deposits) started to be issued at a fixed exchange rate to silver and or gold. This change is a theoretical issue beyond this historical study, but an interesting area for further research.

Timberlake (1993), pp. 11 and 12 (First Bank) and 41 and 42 (Second Bank). Timberlake shows that in the United States the fact that the central banks pursued discretionary policies, fuelled resistance against them.

North (1991), pp. 3–11.

Goodhart (1988).

Capie et al. (1994), p. 5; Although recently Bignon et al. argued that in the 1870s the theory was formulated by Bagehot, but the practice of last resort lending had already emerged earlier. Bignon et al. (2009).

I am grateful to Klas Fregert, Clemens Jobst, Kim Abildgren, Ivo Maes, Juha Tarkka, the Bank of England, and Jan Tore Klovland and Jutta Bolt, all of whom kindly provided data or references to useful sources that enabled international comparison.

1852 is, however, not rigidly maintained to cut off the analysis, because with regard to several aspects of my analysis, e.g. governance or credit policy, it turned out useful to apply a longer perspective as will become clear in the later chapters.

De Jong I-1, 415.

Bignon, V., Flandreau, M., & Ugolini, S. (2009). Bagehot for beginners: The making of lending of last resort operations in the mid-19th century. Working Paper Norges Bank’s bicentenary project (22).

BIS. (2009). Issues in the governance of central banks. http://www.bis.org/publ/othp04.htm.

Bordo, M., & MacDonald, R. (1997). Violations of the ‘Rules of the Game’ and the credibility of the classical gold standard 1880–1914. NBER Working Paper 6115.

Capie, F., Fischer, S., Goodhart, C., & Schnadt, N. (1994). The future of central banking: The tercentenary symposium of the Bank of England. Cambridge: Cambridge University Press.

de Vries, J., & Van der Woude, A. (1994). Nederland 1500–1815. De eerste ronde van moderne economische groei. Amsterdam: Balans.

Dehing, P. (2012). Geld in Amsterdam. Hilversum: Verloren.

Flandreau, M. (2006). Pillars of globalization: A history of monetary policy targets 1797–1997. CEPR Working Paper 6252.

Goodhart, C. A. E. (1988). The evolution of central banks. Cambridge: MIT Press.

Jonker, J. P. B. (1996). Merchants, bankers, middlemen, the Amsterdam money market during the first half of the nineteenth century. Amsterdam: NEHA.

Kymmell, J. (1992). Geschiedenis van de algemene banken in Nederland 1860–1914. Amsterdam: NIBE.

North, D. C. (1991). Towards a theory of institutional change. Quarterly Review of Economics and Business, 31(4), 3–11.

Obstfeld, M., Shambaugh, J. C., & Taylor, A. M. (2004). The trilemma in history: Tradeoffs among exchange rates, monetary policies, and capital mobility. NBER Working Paper 10396.

Quinn, S., & Roberds, W. (2007). The Bank of Amsterdam and the leap to central bank money. In American Economic Review Papers and Proceedings, 97, 262–265.

Timberlake, R. H. (1993). Monetary policy in the United States–An intellectual and institutional history. Chicago: University of Chicago Press.

Ugolini, S. (2011). What do we really know about the long-term evolution of central banking? Evidence from the past, insights for the present. Working paper of Norges Bank’s bicentenary project (15).

van Zanden, J. L., & van Riel, A. (2000). Nederland 1780–1914 Staat, instituties en economische ontwikkeling. Balans.

White, L. H. (1989). Competition and currency: Essays on free banking and money. New York: New York University Press.

Wijtvliet, C. A. M. (1993). Expansie en dynamiek. De ontwikkeling van het Nederlandse handelsbankwezen, 1860–1914. NIBE-bankhistorische reeks XII. Amsterdam: NIBE.

Titel: Introduction
verfasst von: Roland Uittenbogaard
Verlag: Springer International Publishing
Buch: Evolution of Central Banking?
Print ISBN: 978-3-319-10616-8

Electronic ISBN: 978-3-319-10617-5

Copyright-Jahr: 2015
DOI: https://doi.org/10.1007/978-3-319-10617-5_1