ABSTRACT OF PAPER

Title: Metal or Paper: Dual Currencies and Controversies on Monetary Stability in Eighteenth Century Sweden
Author: Ögren Anders


In 1789 the National Debt Office in Sweden was appointed the right to issue small denomination interest bearing paper money by the king Gustave III to fund war against Russia. At the time the Parliamentary owned Bank of Sweden already issued silver backed notes. The flooding of National Debt Office notes quickly paved way for different exchange rates between the bank of Sweden notes and the National Debt Office Notes. Moreover, as prices became quoted in National Debt Office Notes the situation led to two different units of account in Sweden — Riksdaler banco and Riksdaler Riksgälds. The situation led to intense debates on the path to monetary stability where most thinkers would opt for a pure single specie standard but some actualy saw the benefits of the paper standard. In this paper I analyse these debates, how they related both to the monetary context, to the intellectual environment (domestic and international) and how well they stood as consistent monetary theories. The findings are that many sophisticated ideas on monetary systems and adjustment mechanisms such as the working of floating exchange rates, purchasing power parity (usually attributed to the work by Cassel in the early twentieth century) and the problems of price stickiness were well understood in the monetary discourse

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