胡佛研究所-中央銀行數(shù)字貨幣：一個(gè)有新篇章的古老故事

CentralBankDigitalCurrenciesanOldTaleWithaNewChapter*MichaelD.BordoRutgersUniversity,NBERandtheHooverInstitution,StanfordUniversityWilliamRoberdsFederalReserveBankofAtlantaEconomicsWorkingPaper22124OVERINSTITUTIONRSITYNovember21,2022Weconsiderthedebutofanewmonetaryinstrument,centralbankdigitalcurrencies(CBDCs).Drawingonexamplesfrommonetaryhistory,wearguethatasuccessfulmonetarytransformationmustcombinemicroeconomicefficiencywithmacroeconomiccredibility.Aparadoxicalfeatureofthesetransformationsisthatsuccessinthemicrodimensioncanencouragemacrofailure.Overcomingthisparadoxmayrequirepoliticallyuncomfortablecompromises.WeproposethatsuchcompromiseswillbenecessaryforthesuccessofCBDCs.JELCodesEE58,N10Keywordsmonetarysystemsbanknotes,centralbanks,digitalcurrenciesTheHooverInstitutionEconomicsWorkingPaperSeriesallowsauthorstodistributeresearchfordiscussionandcommentamongotherresearchersWorkingpapersreflecttheviewsoftheauthorsandnottheviewsoftheHooverInstitution.*ThispaperwaspreparedforaconferenceheldinhonorofAngelaRedishattheUniversityofBritishColumbia,October22,TheopinionsexpressedinthispaperarethoseoftheauthorsandnotoftheFederalReserveBankofAtlantaoroftheFederalReserveSystem.1EveryyearanewcohortofeconomistsbeginstheirprofessionalcareerswithatripintoandonemoreunlikelythananythingWaltDisneyeverimaginedInthismakebelievedknownastheArrowDebreumodelanygoodmaybeeffortlesslyexchangedtoobtainthersocksforautomobilespeanutbutterforelectricitylaborhourstodayformedicaltenyearsfromnowYetdespiteitsevidentlackofverisimilitudethisabstracttheoryofvalue”underpinsmuchofmoderneconomicsandfinance.TheidealizednatureoftheArrow-Debreumodelalsooffersinsightintothefunctionofmoney.Onereal-worldcomplicationthatmakesthemodelseemunrealisthephenomenonofadverseselectionfamouslydescribedbyGeorgeAkerlofinthecontextofusedcarsthemarketucanevengetstuccoParamountPictures1929).2Money,apointlessentityinthelandofArrow-Debreu,offersapopularifpartialsolutiontothisproblembyconcentratingadverseselectionononesideofatransactionthebuyergetsagoodthesellergetsmoneyThevalueofthemoneyreceivedcanbedeterminedbytaleiebysimpleenumerationAcceptanceofmoneyisnotsomuchdrivenbyillusionasbyinformationalparsimony.nidealmoneyfromthisinformationalperspectivewouldthusbeanassetwhosevalueissoobviouslyinvariantthat“noquestionsareasked”(Gorton2017),and2)whichcanbetransferredinaquick,costless,andverifiablemanner.Theevolutionofmoneycanbeseenasaprogressionoftechnologiestobetterapproximatethisideal,aswasexplainedbyDavidRicardoin1816:Allwritersonthesubjectofmoneyhaveagreedthatuniformityinthevalueofthecirculatingmediumisanobjecttogreatlybedesired.Everyimprovementthereforewhichcanpromoteanapproximationtothatobject,bydiminishingthecausesofvariation,shouldbeadopted.(Ricardo1816,7).Moresuccinctly,Ricardonoted(ibid.)that“inthemediumofcirculation,[the]causeofuniformityis[the]causeofgoodness.”2Thetheoryofpaymentsassumesthatinformationalfrictions,includingadverseselection,aresoextremethatnoexchangecanoccurwithoutsomespecialarrangement;seeKahnandRoberds(2009)foranintroduction.2Modernformsofmoneyandpayments,readilyavailableandeasytouse,appeartodreamofubiquitousuniformityBarterexchangeisrarelyprohibitedbuteopleprefertoswapgoodsformoneyMonetaryexchangehasbecomesoconvenientthateconomistsareoftentemptedtopretenditdoesnotexist,orthatitexistsonlyasathinveilovertheimaginarylandscapeofArrow-Debreu.Manyotherwisesophisticatedeconomicmodelseffectivelypresumethatcarscanbereadilyswappedforpeanutbutter.rsuccessfulbothinpracticeandintheorymodernmoneycontinuestoderiveitsuefromtheunderlyinginformationalasymmetryofrealworldtransactionsTrustthereforenassetsmonetaryfunctionmeaningthatallmoneyistosomeextentfiduciaryThisfactgivesrisetoaphenomenonwelabel“themonetaryparadox”:thecloseranassetcomestothemonetaryideal,thefewerquestionsgetaskedandtheopaqueritbecomes;yetthissameopacitycreatesatemptationformoneyproducers(privateandpublic)tounderminethequalityoftheassetviaoverissue.Micromonetarysuccessbreedsmacromonetarymischief.InthewordsofMiltonFriedman:Solongasthefiduciarycurrencyhasamarketvaluegreaterthanitscostofproduction—whichunderfavorableconditionscanbecompressedclosetothecostofpaperonwhichitisprinted—anyindividualissuerhasanincentivetoissueadditionalamounts.Afiduciarycurrencywouldthusprobablytendthroughincreasedissuetodegenerateintoacommoditystandardtherebeingnostableequilibriumpriceshortofthatatwhichthemoneyvalueofcurrencyisnogreaterthanthatofthepaperitcontains.Andinviewofthenegligiblecostofaddingzeros,itisnotclearthatthereisanyfinitepricelevelforwhichthisisthecase.(Friedman,1960,p.7)AfacilewayofsummarizingAngelaRedish’scontributionstomonetaryeconomicsisthattheyhavechronicledasequenceofmonetarytransformations,encompassingbothimprovementsasenvisionedbyRicardoandvarietiesofcheatingasenvisionedbyFriedman.Theresulthasbeenafinenarrativeofhistory’srediscoveriesofthemonetaryparadox.ThisessaywilldrawonRedish’sworktoreviewthehistoryofmonetarytransformationsandtoexploreanemergingtransformation,thearrivalofcentralbankdigitalcurrencies(CBDCs).FromthisreviewwewillarguethatCBDCscanbestbeunderstoodasnewchapterinanoldtale,andthattechnologywillnotprovideaneasyescapefromthemonetaryparadox.3astheoriginaltransactiontechnologyModerneconomicsreferstoearliertypesofcoinas“commoditymoney,”anamethatissometimestakentomeanthatthesecoinswerestandardizedchunksofbullion.WorkssuchasRedish(1988,1993,2000)andGlassmanandRedish(1988)illuminatethetruenatureofcommoditymoney,whichwasdecidedlymoreinformation-intensive.Thoughthevalueofcoinsultimatelyderivedfromtheirfinecontent,itwasnotpracticaltoweighandassaycoinsforeverytransactionAdefinitiveassayrequiredmeltingdownthecoin.Successfulcoinswerethusopaqueinstrumentsthatoftentradedabovetheirputativemetallicvalueandsometimeswellabovetheirlegallyassignedvalueintermsofthelocalunitofaccount.Opacitycreatedstrongincentivesformonetarydegradation,incentivesthatfiscallyconstrainedsovereignsoftenfounddifficulttoresist.Redish0,61-62)catalogsthefourcommonwaysofmanipulatingcommodityorderofincreasingsubtletyreducingacoinsweightreducingitsfinecontentassigninganewlegalvalueto(“cryingup”)acoin,andintroducinganewcointhatresembledanexistingcoinbuthadahighernominalvalueperunitoffinecontent.Allformsofmanipulationweredefactodebasements.GlassmanandRedishemphasizethatthesemanipulationscouldalsobebenign,mostlydefensiveresponsestoexternalforcessuchasclippingandcounterfeiting,movementsinthemarketgold-silverpriceratio,ordebasementsofcompetingcoinsfromneighboringjurisdictions.Inadditionrulerswereawarethatmodestdebasementscouldimpartmonetarystimulustotheirlocaleconomies.Afourteenth-centuryFrenchmonarch,PhilippIIIofNavarre,receivedsomepointedadvicetothiseffectfromhisadvisor,GuillaumedeSoterel.DeSoterelobservedthatmanymerchantsactuallyfavoreddebasement,whenpracticedinmoderation:[This]sortofmenarethosewhoengageincommerce,whowishforanothersortofoorexceptwhenmoneyisinamiddlestate.(Leroy1972,110,citedatSpufford1989,305)HoweverDeSoterelwascarefultodistinguishthismildlydebased“middlesortofmoney”fromthegrosslydebasedcoinsmintedduringwartime:4Thissortofmoneyisdesiredbylordswhentheyareatwarandhecanthusstrikecoinsasfeebleashelikestohavethemeanstopayhistroopstodefendhimandhispeopleandhisland.Butattheendofthewar,heoughttotakethismoneyinagain.(Ibid.,306)AsRedishhasargued,themostsurprisingfactaboutdebasements,offensiveanddefensive,maybehowoftenpeopleignoredthem.3Theinformationaladvantageofanopaquetransactionsinstrumentwasenoughforpeopletotolerate,orasDeSoterelsuggested,evenpreferacertainpaceofendemicmonetarydegradation.Thisadvantagewassufficientlylargethatanimportantadvanceincoinagetechnology,edgemarking,wentunimplementedforabout150years(Redish2000,54-61).Edgemarking,alsoknownasmilling,enhancedmonetaryuniformitybyreducingcoinclipping.Sovereigns,mintmasters,andmarketinsiders(moneychangers),allofwhombenefitedfromthevariablequalityofunmilledcoinage,delayedthecommonuseofthistechnologyuntilthelateseventeenthcentury.Bythattime,amorefar-reachingmonetarytransformationwaswellunderway.ansformationfromcoinstopaperInamanstumbledacrossasilverlodenearPotosí,inmodern-dayBolivia,ostensiblywhilelookingforalostllama(Lane2019,20-22).Thechancediscoveryofthissilverlode,theworld’slargest,soontrebledglobalsilverproduction(Soetbeer1876,8).PotosíwasfollowedbyotherspectacularfindsofsilverandgoldoreintheNewWorldTePaskeandBrown2010,56,113).4Bythecloseoftheeighteenthcentury,70percentoftheworld’ssilverand40percentofitsgoldhadbeensuppliedfromAmericanmines.Thisfloodofpreciousmetalissometimescreditedwithcausingaaworldwideinflation(Hamilton1934)butitsmorelastingAlthoughpricesdidtendtoadjustquicklyinresponsetolargewartimedebasementsseealsoRolnick,Velde,andWeber(1996).Whypeoplechosetoreadilyacceptdebased,clipped,orotherwiseflawedcoinshasbeenasubjectofnsincludingVeldeWeberandWrightBignonandDutuandBajaj4BeforethediscoveryofthePotosílode,thevalueofworldgoldproductionslightlyexceededthatofsilverPotoshoweversilverdominatedworldpreciousmetalproductionuntilthediscoveryoftheCaliforniagoldlodesin1849.Silver’srelativeabundancemeantthatmostcountrieswereonadefactosilverstandardduringthisperiod.5effectwastoturbochargelong-distancetrade.5Trade,inturn,madepreciousmetalgloballyscarceandironically,helpedfosterthedevelopmentofEuropeanpapermoney.Themostimportantpaperinstrumentfortradingpurposeswasthebillofexchange.Billsofexchangeallowedmerchantstomovefundsbetweencitieswithoutthephysicaltransferofpreciousmetal.CreditextendedviabillswasalsoexemptfromtheChurchbanoninterest.Oncefexchangelandedinitsdestinationcityhowevertherethenarosethequestionofhowthebillwouldbesettled.6Inprinciple,settlementscouldbemadeincoin.Inpractice,however,merchantsoftenpreferredtosettleinlocalpapermoney(JobstandNogues-Marco2013).Formsofsettlementincludedfairmoneyapracticeofnettingoutobligationsduringtradefairs,usingacommon,fictionalunitofaccount(B?rnerandHatfield2017),andsettlementusinglocalprivatebanks,knownasthe“goldsmiths”inLondon(Quinn1997)or“cashiers”intheLowCountriesAertsSettlingdebtsonpapereconomizedtheuseofpreciousmetalandsidesteppedthequalityproblemsendemictoearlymoderncoins.Fromthefifteenthcenturyonward,publicbanksassumedalargerroleintheprovisionofalpapermoneyThefirstsuchinstitutionwasBarcelonasTauladeCanvifoundedinTheideaofpublicbankingthenspreadtoMediterraneancommercialcitiessuchasGenoaandnEuropeancitiessuchasAmsterdamStockholmRoberdsandVeldeaByonecounttherewerepublicbanksoperatinginEuropeatthecloseoftheseventeenthcentury(Clapham1945a,3).AlmostallthesepallycharteredledgermoneybanksTopaywithbankmoneypayorandpayee(ortheirservants)literallywalkedtothebankandinitiatedthetransferoffundsrsaccounttothepayeesEverytransactionwasrecordedonthebanksledgerand5SeePalmaandSilva(2021).“Turbocharge”isarelativeterm.Earlymodernworldtraderatios(annualexportsplusimports,asapercentageofworldGDP)remainedinthesingledigits(Estevadeordal,Frantz,andTaylor2003).Bytheturnofthetwentiethcentury,thisratiogrewtoabout20percent,andtodayitrunsabout60percent.Thesecularincreaseintradehasbeenanimportantdriverofthemonetarytransformationsdescribedinthispaper.6Billsofexchangecouldalsocirculateviaendorsement,totheextentthiswasallowedbylocallegalsystems.Such“negotiable”billsofexchangethusservedasmoney;see,e.g.,Gorton(2020)onthemonetaryuseofnegotiablebillswithinEngland.7BoththeLondongoldsmithsandtheLowCountriescashiersalsoissuedcirculatingnotes.Thesewouldnotattainthewidecirculationandbroadacceptanceoflaterissuesbypublicbanks.8Thetermearlypublicbanksincludesbanksownedbymunicipalities(asinAmsterdam),banksownedprivatelybutoperatingunderanexclusivecharter(asinLondon),andatleastonecase(Naples)ofcharteredbankinginstitutionsoperatedbyreligiouscharities.6waswitnessedbyatleastthreesetsofeyes,minimizingthepotentialforfraud.Credibilityofthebankwasensured,inprinciple,byconvertibilityofaccountbalancestocoin.ermoneytypeofpublicbankwasmostsuccessfulinAmsterdamDehingQuinnandRoberds9).There,convertibilityofaccountswaslimitedfrom1683,amtocreatefiatmoneyThismoneywasusedtosupportthecitytIndiaCompanyConsistentwithFriedmanspredictionexcessivelendingtothelatterledtothebank’scollapsein1795(QuinnandRoberds2016).ransformationfromledgermoneytobanknotesLedgermoneygirotransactionsenjoyedsomesuccessespeciallyforlarge-valuetransactionsButgirotransactionswerealsocostlyinconvenientandbytheirnatureneverfullyprivateThesedisadvantagesledpeopleinearlymodernEuropetoexperimentwithcirculatingbanknotesasanalternativeformofpapermoney.9Thefirst,tentativeuseofhand-to-hand,cbankinstrumentsemergedinthelatesixteenthcenturyBythecloseofthenineteenthcenturybanknoteswereusedinallmajorEuropeancountriesandhadassumedamodernformstandardized,fixed-denominationbearerinstrumentsissuedexclusivelybyacentralbankorbyagovernmentquasimonopolyRedish1993,82).Theintervening300yearswerenotrogressiontowardRicardosuniformityhoweverbutbyasequenceofmonetaryexperiments,manyoftheseendingbadly.eoftheearliestsurvivingpublicbanknotesarefromNaplesCostabileandNappiThesenotesresembleportableledgers,withthenameofthepartytowhomthenotewasissuedrecordedonthenoteandthenamesofallsubsequenttransferees,aswellasthedatesandamountsoftransactions.10Moreanonymous,bearer-typenoteswereissuedbypublicbanksinAmsterdaminDehingandStockholmin66(Wetterberg2009,44–45).Bearernotesrepresentedaninformationsavingsoverearlierledger-typenotes,asonlytheobligationof9WewillnotconsidertheearlierandextensiveuseofpapercurrencyinplacesoutsideEurope,ofwhichChinaprovidestheoutstandingexample(Glahn2016).10Thesenoteswerehoweverstillbanknotesinthesensethattheywereatalltimesobligationsoftheissuingbankandnotthenoteholder.7theissuerwasrecordedonthenote.11ThesealsohadtheadvantagethattheycouldbeusedivacyproveddifficulttomanageBoththeAmsterdamandStockholmnotesebesetwithfraudandendedwiththeexecutionandjailingrespectivelyofthebankofficialsresponsibleforissuingthenotes.BanknotesattainednewrespectabilitywiththefoundingandriseoftheBankofEnglandBankDrawingontheexampleofGenoasCasadiSanGiorgiotheBankwascharteredadebtmanagementagencyTheprivatelyownedBanksoughttoleverageitsstockholders’capitalbytheissueofvariouskindsofshort-termbillsandnotes.12ThesewerelargeholdingsofstatedebtThetargetmarketfortheBanksshortterminstrumentsconsistedofLondonmerchantswhowereusedtodealinginfinancialclaims,includingearliertypesofnotesissuedbyprivateparties(i.e.,goldsmiths).PublicskepticismofplanwasreflectedinthefactthattheBanksinitialcharterranforonlyyearsSkepticismheBanksnoteswerenotrecognizedaslegalmoneyonlyclaimstomoneyietocoinheldattheBank).ngasomewhatshakystarttheBankenjoyedfabuloussuccessTheBanksfirsttypesofnotes,customizedandhandwritten,gavewaytomoreconvenient,preprintedbearernotesinfixeddenominations,whichwereeasytospendandwereredeemableincoinondemand.Notedenominationswerekeptlarge,￡20beingtheminimumuntil1759,13thisamountbeingequaltoabout40weeks’payforanordinarylaborerin1700.14ThesenotesprovedextremelypopularwithLondonmerchantsandtheBankexperiencedlittletroublegainingcharterrenewalsfromParliament.15ThequidproquoforeachrenewalwasthattheBanktakeonmorestatedebt,butbyacombinationofshrewdmanagementandgoodfortune,theseaccommodationsdidnotfoundertheBankBytheBank’snote-heavybalancesheethad11Inmodernpaymentsjargon,theseearlynotesweretoken-basedratherthanaccount-basedpaymentinstruments;see,e.g.,GortonandZhang(2022).12Richards(1934,219-30).TheBank’sfoundinghassometimesbeendescribedasadebt-for-equityswap.13SeetheBankofEnglandwebsite<bankofengland.co.uk/about/history>.14HistoricaldataonEnglishwagesareavailableinthedataset“AMillenniumofMacroeconomicData,”whichcanbedownloadedfromtheBankofEngland’swebsiteat<bankofengland.co.uk/statistics/research-datasets>15Renewalsweregrantedin1697,1708,1713,1742,1764,and1782;seeBrozandGrossman(2004,51).8timesthatofitsmostprestigiousrivaltheledgermoneyBankofAmsterdamdVeldebnkofEnglandstriumphwasnotatechnologicaloneItsnotesweresimpleIOUsongtheBankswealthyLondonbasedclienteleAdherencetostrictaccountingstandardslargelyeliminatedinsiderfraud.CounterfeitingandotherformsoffraudwerealsominimalintheearlydecadesoftheBank(McGowan2007).TheseemingeaseedBritainsfiscalcapacitygeneratedenvyandeventuallyimitationinotherEuropeancountriesThesecountriesdiscoveredhoweverthattherealkeytoesswasnotthesuperficialuniformityofitspapermoneybutitsunwillingnesstokeonmorestatedebtthanitsnotecirculationcouldreasonablysustainTheBankscredibilitywasalsoenhancedbyParliamentspolicyoffundingallocatingspecifictaxrevenuesto)mostofthedebtheldbytheBank(BrozandGrossman2004).eddifficulttoreplicateSwedenssecondattemptatapublicbank,theRiksensSt?nderBank(“BankoftheEstatesoftheRealm,”laterrenamedtheSverigesRiksbankwascharteredin1668andbegan(reluctantly)issuinglarge-valuecustomizednotesinWetterbergTheseweregraduallyshiftedtolowdenomination,fixed-denominationbearernotes,whichenjoyedconsiderablesuccess,especiallyasanalternativetothecumbersomecoppercoinagethenprevalentinSweden.In1739,however,anewpoliticalparty(the“Hats”)cametopowerintheSwedishparliament.TheHatsweredeterminedtoexploittheRiksbankinordertosupportSwedensexpensivemilitarycampaignsBordoandLevyandtooffermortgageloanstothenobility(Heckscher1934).Theseactivitieswerefundedbytheissueofadditionalbanknotes,whichbecameirredeemablefrom(Fregert2014,342).TheresultwasacollapseintheforeignexchangevalueoftheSwedishcurrencyandultimately(in1765),apoliticalbacklashwhenanewpoliticalparty(the“Caps”)rTheCapscontractedRiksbanklendingboughtupmanyofitsnoteseestablishedredeemabilityandcollapsedtheSwedishpricelevelbypercentwithinfouryears(1765to1769),therebyplungingthecountryintodeeprecession(EdvinssonandS?derstrom2010).9sbanksurviveditstroublesandexiststodayastheworldsoldestcentralbankOtherearlynoteissuingpublicbankswerenotasfortunateFrancesBanquegénéralewasancierJohnLawVeldeLawsbankexpandedquicklyandattemptedtofundtheentireburdenofFrenchpublicdebtviabanknotesandanequityissue.Whentheequitysharesdidnotsell,LawprintedmorenotesandusedthesetopumpuptheenerStadtbancoViennaMunicipalBankwasfoundedinJobstandKernbauerToallaypublicdistrust,thisbankwascharteredasamunicipal(notcrown)agencyandfundeditselfnotwithbanknotes,butwithinterestbearingtimedepositsUnrelentingfiscalpressurehowever,resultedinthedefactonationalizationofthebankin1759andthefirstissueofbanknotesin1762,asmeasurestohelppubliclyincineratedfouryearslaterbutNapoleonicerafiscalpressuresledtomorenoteissues,andultimatelyapapermoneyquasihyperinflationTheMunicipalBankwasdeclaredinsolventin1816anditsnoteholdersendureda92percentwrite-down.Directissuesofnotesbysovereignstatesfarednobetterthanthenotesofmostearlypublicbanks.Highlyinflationaryissuesbyrevolutionarygovernments,ContinentalsintheUnitedStatesandassignatsinFrance,didlittletoenhancethereputationofpapercurrencyeWhiteAraresuccessstoryoccurredinScotlandwhereprivatebanksissuedstablewidelyusednotesduringtheeighteenthandearlynineteenthcenturies.TheliteraturehasdebatedhoweverwhethertheScottishsuccesswasduetoastuteregulation(White1984)oroligopolisticindustrystructure(Goodhart1988).Eventheposterchildofbanknoteissue,theBankofEngland,wasconfrontedwithseverechallengesduringNapoleonicperiodWartimefiscalpressureledtheBanktosuspendconvertibilityin1797andissueemergencymoneyintheformof￡1and￡2notes,pushingtheBankintotheunfamiliarbusinessofretailpayments.16Organizedcriminalsthenunleashedwavesofcounterfeitsmall-denominationnotes(Palk2006,McGowan2007).TheneedtoobtainjuryconvictionsofcounterfeitersmeantthatBankwasnowconfrontedwithacostlyanddifficultAtthistime,￡1wasequaltoabouttwoweeks’wagesforanaverageworker.enforcementproblem.17Newlegislationpassedin1801allowedtheBanktoprosecuteanyonecaughtwithacounterfeitnote,foranyreason,withthemorelenient(i.e.,non-capital)punishmentofdeportationtoAustraliaforyearsuponconviction(“transportation”).Armedwiththisnewlaw,theBanktooklegalactionagainstthousandsofcounterfeiters,manyofthemwomen,andwasabletotransportorexecutethemajorityofthem.Theferocityofthisanti-counterfeitingcampaignunderminedtheBank’sstandingwiththepublicingeneralandwithjuriesinparticular.ConvertibilityofBankofEnglandnoteswasresumedin1821butthetroublesomesmall-denominationnoteshadtobewithdrawn,acapitulationtotheforcesofadverseselection.dStatespublicbanktheFirstBankoftheUnitedStatesoffersaninterestingcontrasttoitsEuropeanpredecessors(Cowen2000).CharteredbyCongressin1791andcloselymodeledontheBankofEngland,theprivatelycapitalizedbankwasabletoavoidmanyofthemistakesofitscrossAtlanticcousins.Itdidnotsufferinsiderfraud,grossmismanagementwidespreadcounterfeitingorfiscaldepredation.Itslarge-valuenotesweretosomeextentseenasNQAassetsandthankstoanationalbranchnetworktheseachievedawidecirculationTheundoingoftheBankwasitstechnicalsuccessJealousybysmallerstate-charteredinstitutionsandresentmentofitsforeignshareholders(manyoftheseBritishcitizens)ledtothedissolutionoftheBankin1811.rizesthenoteissuingexperiencesofselectedearlypublicbanksintoa“reportcard.”Therecordoftheseinstitutionswashardlyoneofconsistentsuccess.Onlyintwolocations(LondonandNaples)didpublicbanknotesobtainaclear“passinggrade.”17Morespecifically,theBankhadtopayrewardstopoliceforturningovercounterfeiters,hireitsownnetworkofprosecutorsselectwinnablecasesforprosecution,andpursuethesecasestoconviction.Publicsympathyforthetypicallyunderprivilegedcounterfeiters,whofacedthedeathpenaltyifconvicted,oftenresultedinjurynullificationoftheBank’sefforts.eissuesbyearlypublicbankstionFirstnoteissuelt“Grade”NaplessterdamdestsuccesswithcustomizedledgerlikenotesGaveupnoteissuein1673duetoinsiderfraudBDmIMoreinsiderfraudbankclosedin1667FonargedenominationsissuesofsmallnominationnotesfailedduetocounterfeitingBInitialsuccesslaterinflatesarealestatefinancebubble;unwindingcrashesSwedisheconomyCsAttemptedtofinanceentireFrenchstatedebt;collapsesFRanquasihyperinflationduringNapoleonicwars;liquidatedin1816DadelphiaicaljealousybankquidatedinDansformationTheClassicalGoldStandardrysituationinearlynineteenthcenturyEuropeandNorthAmericacanbedescribedasorderlychaosBordoandRedish016,597).AfterthedisruptionsoftheNapoleonicwars,manycountriesreturnedtothecoinagestandardsoftheearlymodernperiod.Byhistoricalhappenstance,GreatBritainwasonagoldstandard.18France,andallofcontinentalEuropewiththeexceptionofPortugal,aswellastheUnitedStates,wereonbimetallicstandards.18Asnotedabove,mostearlymodernpolitieswereonadefactosilverstandardbecausesilverwasingreaterabundancethangoldGreatBritainwasanexception.In1717,SirIsaacNewton,masteroftheRoyalMintovervaluedthestandardgoldcoinsovereign)relativetosilveratthemint,puttingGreatBritainonthegoldfactothegoldstandardbecameofficialinRedishothisatmosphereofchaoswasdisillusionmentwithpapermoneyMostofthepre-Napoleonicpublicbankswerefacedwitheitherclosureorheavyrestructuring,tionoftheBankofEnglandRoberdsandVeldecAlthoughgreatquantitiesofpublicbanknoteshadbeenissuedovertheprecedingcentury,themajorityofeswereunsuccessfulateitherthemicroeconomicormacroeconomiclevelscfTablePublicdisapprovalofbanknotesranwideanddeep.“Suchapaper,inplaceofpearlsandgoldsniffstheDevilinGoethesFaustPartIIpublished),“isconvenient,aslongasoneknowswhatonehas”(Bernays1839,40).reputationdidnotmeanthattheywouldnowbegoingawayEventheDevilhadtoadmitthatpapercurrencywasconvenient,andgovernmentshadnotlostvantagesconfe