On This Day: July 16th

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On July 16th 1661 the first bank notes in Europe were issued by the Swedish bank Stockholms Banco. The notes replaced the copper-plates being used as a new means of payment. This banknote issue was brought about by the peculiar circumstances of the Swedish coin supply. Cheap foreign imports of copper had forced the Crown to steadily increase the size of the copper coinage to maintain its value relative to silver. The heavy weight of the new coins encouraged merchants to deposit it in exchange for receipts. These became banknotes when the manager of the Bank decoupled the rate of note issue from the bank currency reserves. Three years later, the bank went bankrupt, after rapidly increasing the artificial money supply through the large-scale printing of paper money. A new bank, the Riksens Ständers Bank was established in 1668, but didn’t issue banknotes until the 19th-century.

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