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Regulated free banking in Switzerland (1881–1907)

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  • Nils Herger

    (Study Center Gerzensee)

Abstract

The free-banking history of Switzerland is subdivided into periods with unfettered competition (1826–1881), and strict banknote regulation (1881–1907). This paper suggests that the Federal Banknote Act of 1881 was introduced to remedy the fragmentation of the unfettered-competition period, during which private note-issuing banks were unable to issue standardised paper money. Although the corresponding minimum-reserve and mutual-acceptance rules led to a standardisation, they created new problems. For example, these regulatory interventions reduced the flexibility (or “elasticity”) of the paper-money supply. It turned out that a central note-issuing bank is needed to supply adequate amounts of standardised banknotes.

Suggested Citation

  • Nils Herger, 2021. "Regulated free banking in Switzerland (1881–1907)," Swiss Journal of Economics and Statistics, Springer;Swiss Society of Economics and Statistics, vol. 157(1), pages 1-12, December.
    • Handle: RePEc:spr:sjecst:v:157:y:2021:i:1:d:10.1186_s41937-021-00078-w
    DOI: 10.1186/s41937-021-00078-w
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    Cited by:

    1. Niko Hauzenberger & Daniel Kaufmann & Rebecca Stuart & Cédric Tille, 2022. "What Drives Long-Term Interest Rates? Evidence from the Entire Swiss Franc History 1852-2020," IRENE Working Papers 22-03, IRENE Institute of Economic Research.

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    More about this item

    Keywords

    Central bank; Free banking; Note-issuing bank; Switzerland;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • N14 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - Europe: 1913-
    • N23 - Economic History - - Financial Markets and Institutions - - - Europe: Pre-1913

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