Bank of Amsterdam

Not to be confused with Amsterdamsche Bank.

The old town hall in Amsterdam with the Wisselbank to the right of the tower. Painting by Pieter Saenredam
Dam square and town hall in 1656 with the Wisselbank in the lower left by Johannes Lingelbach

The Bank of Amsterdam or Wisselbank (Dutch: Amsterdamsche Wisselbank, lit. 'Exchange Bank of Amsterdam') was an early bank, vouched for by the city of Amsterdam, and established in 1609.[1] It was the first public bank to offer accounts not directly convertible to coin. As such, it has been described as the first true central bank,[2] even though that view is not uniformly shared.[a] The Amsterdam Wisselbank was also active in the production of coins. For decades the assay master of the Bank sent out stocks of gold and silver to the various Mints in the United Netherlands to receive new coins in return.[4]

Unlike the Bank of England, established almost a century later, it neither managed the national currency nor acted as a lending institution (except to the government in emergencies); it was intended to defend coinage standard. The role of the Wisselbank was to correctly estimate the value of coins and thus make debasement less profitable.[5] It had a global impact on money and credit.[6] It occupied a central position in the financial world of its day, providing an effective, efficient and trusted system for national and international payments, and introduced the first-ever international reserve currency, the bank guilder. The model of the Wisselbank as a central bank was adapted throughout Europe, including the Bank of Sweden (1668) and the Bank of England (1694). David Hume praised the Bank of Amsterdam for its policy of 100 percent specie-backed deposit reserves.[7]

The bank's full-reserve policy relaxed over time as it lent money to finance overseas trade and to support the Dutch economy, but it remained liquid by requiring good collateral on its loans. This changed with the Fourth Anglo-Dutch War, when the Dutch East India Company defaulted on large unsecured advances from the bank. Despite several attempts to recapitalize, confidence in the bank never recovered.[8] During the last decade of the Republic of the United Provinces, in 1790, the premium on the bank's money disappeared, and by the end of the year, it had declared itself insolvent. The City of Amsterdam assumed control of the bank in 1791. The Nederlandsche Bank was established in 1814, and took over money issue duties for the new Kingdom of the Netherlands, while the Wisselbank entered liquidation in 1819.

  1. ^ Quinn, Stephen; Roberds, William (2005). "The Big Problem of Large Bills: The Bank of Amsterdam and the Origins of Central Banking" (PDF). Federal Reserve Bank of Atlanta Working Paper 2005–16.
  2. ^ S. Quinn & W. Roberds (2006) "An economic explanation of the early Bank of Amsterdam, debasement, bills of exchange, and the emergence of the first central bank," FRB Atlanta Working Paper 2006–13, Federal Reserve Bank of Atlanta.
  3. ^ Ulrich Bindseil (2019). Central Banking before 1800: A Rehabilitation. Oxford University Press.
  4. ^ Albert Scheffers (2020) Muntmeesterrekeningen bij de Amsterdamse Wisselbank
  5. ^ Phoonsen, Johannes (31 March 1677). "Berichten en vertoogen, raackende het bestier van den omslagh vande wisselbanck tot Amsterdam". by Jan Bouman – via Google Books.
  6. ^ Quinn, Stephen; Roberds, William (2023). How a Ledger Became a Central Bank: A Monetary History of the Bank of Amsterdam. Cambridge University Press. doi:10.1017/9781108594752. ISBN 978-1-108-59475-2. S2CID 265264153.
  7. ^ Rothbard, M. (1995), Economic Thought Before Adam Smith: An Austrian Perspective on the History of Economic Thought, vol. 1, p. 428
  8. ^ Frost, Jon; Shin, Hyun Song; Wierts, Peter (10 November 2020). "An early stablecoin? The Bank of Amsterdam and the governance of money". Bank for International Settlements.


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