Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/224159
Authors: 
Herger, Nils
Year of Publication: 
2019
Series/Report no.: 
Working Paper No. 19.06
Abstract: 
The free-banking history of Switzerland is commonly subdivided into a period with unfettered competition (1826 - 1881) and strong banknote regulation (1881 - 1907). This paper suggests that unrestricted competition between private note-issuing banks gave rise to a fragmented paper-money system, which suffered from a lack of standard- ised, and commonly accepted, banknotes. Minimum-reserve requirements and mutual- acceptance rules were introduced to standardise banknotes. Rather than overissuing, these regulatory interventions restricted the exibility (or "elasticity") of the paper-money supply. It turned out that a central note-issuing bank was needed to supply adequate amounts of standardised banknotes.
Subjects: 
central bank
free banking
note-issuing bank
Switzerland
JEL: 
E42
N14
N23
Document Type: 
Working Paper

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