Sveriges Riksbank and the History of Central Banking

News The anniversary book, produced for the celebration of the Riksbank’s 350th anniversary, is now ready. “The defence of the value of money has always been relevant, but the problem has been expressed in different ways in different contexts. We thought it would be relevant to compare the Riksbank’s history with those of other important central banks. And that’s how we got the idea for this book”, says Rodney Edvinsson, associate professor and lecturer in economic history at Stockholm University and one of the book's editors.

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Why are we publishing an anniversary book on the Riksbank?

"This year, the Riksbank will be 350 years old, making it the world's oldest central bank. From an international point of view, it is a unique monetary institution, as all other central banks, in varying degrees, have related to the Riksbank in one way or another. In addition, the Riksbank's predecessor, Stockholms Banco, issued the first banknotes in Europe. It is also pleasing to see so many internationally recognised researchers sharing their insights.

For example, in the book, Professor Jan Luiten van Zanden and Dr. Gerarda Westerhuis (both from Utrecht University) describe Amsterdam Bank, founded 1609, as a "proto central bank", but this bank no longer exists. The Bank of England, about which Charles Goodhart, professor, London School of Economics, and former member of the Bank of England's monetary policy committee, writes, has acted as a model central bank for other countries, but it was not founded until 1694. Klas Fregert, professor, Lund University, describes how the Riksbank's history teaches many interesting lessons on how monetary policy has been conducted during various historical periods. "The defence of the value of money has always been relevant, but the problem has been expressed in different ways in different contexts. We thought it would be relevant to compare the Riksbank's history with those of other important central banks. And that's how we got the idea for this book.

What is the book about?

"We review the histories of twelve different central banks: Sweden, England, Spain, France, the Netherlands, Norway, Italy, Japan, the United States, Germany and China, as well as the European Central Bank (ECB). This international comparison has been written by Michael Bordo, professor, Rutgers University, and Pierre Siklos, professor, Wilfrid Laurier University. Briefly, the book deals with the nature of a central bank's tasks, how economic crises have affected the functions taken on by the central banks in various historical eras, how money has been used, the macroeconomic consequences of the formation of a central bank and various monetary regimes, as well as future challenges arising from developments such as a cashless society.

What did you find particularly interesting yourself?

"That there is so much to learn from different countries' monetary histories. For example, there are many similarities between Norges Bank and the Riksbank. But there are also many differences. Countries such as the United States and Italy have long had a decentralised monetary structure, in which resistance to a central banking system is connected to political decentralisation. Even if history does not necessarily allow us to predict the future, it does give us the possibility of making interesting and relevant comparisons with current phenomena. For example, the spread of various crypto-currencies can be compared with how Sweden, in the 17th and 18th centuries, had five different coin types in parallel, all with floating exchange rates against each other. Central banks can also be circumvented. This happened, for instance, when Gustav III formed the Swedish National Debt Office, which then issued its own banknotes, because the Riksbank was unwilling to extend loans to him for his war efforts. Another example is when the Spanish central bank, Banco de España, became, in practice, a part of the ministry of finance under General Franco in the 1950s and 1960s.

One further example is the European Central Bank, the ECB, which is certainly a unique historical construction in which monetary policy has been moved to a supranational institution; one historical parallel, however, is provided by previous monetary unions, such as the Scandinavian monetary union. Otmar Issing, professor and previous member of the ECB's Executive Board, writes about this in his chapter."

In addition to Rodney Edvinsson, editors for the book are Daniel Waldenström, Research Institute of Industrial Economics (IFN) and Paris School of Economics, and Tor Jacobson of the Riksbank's Research Division.

Updated 25/05/2018
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