The Advent of Central Banks

In these historical events, we would see how paper money circulated everywhere and started banks, real estate, trading, and insurances

In 1660 semi-official banknotes began to appear. The Stockholm Bank has circulated unofficial paper receipts out to town. People have noticed that banks have lent out more than what it has in its vault, and they crumbled after all their money to be given back to them. The Bank could not afford to give people their money back more than what it has. Then the great civil war occurred.

The Bank of Stockholm
The Bank of Stockholm

In 1666 the Great Fire of London swept through and incinerated 13,000 homes. Nicholas Barbone, the son of Praise-God Barbone, was a physician, and the founder of real estate and construction. Nickolas Barbone offered house insurance and invented the mortgage.

Nicholas Barbone and the Great Fire of London
Nicholas Barbone and the Great Fire of London

In 1695 England established a Central Bank, the “Bank of England” to raise money and help refit the navy. Nicholas Barbone also established The National Land Bank. During those times a belief system hovers almost every nation of the world, “mercantilism” means to gain Gold and Silver as much as possible and avoid any export at all costs. Because of his witty brain, Nicholas suggested using paper money instead of gold and silver believing that gold and silver have no value but only depend on the market demands.

The Bank of England
The Bank of England

John Law, the son of wealthy Scottish goldsmiths turned bankers. He desired gambling and woman more than the banking system he used to do. He moved to the Dutch Republic and learned how it became a powerhouse. He learned the secret of money supply and availability of credit that is backed by the amount of Gold and Silver. He became one of the richest men in Europe by mastering his craft through gambling.

John Law English Economist
John Law English Economist

John Law also made a pivotal move to go to Paris and offered them a smart plan, to form a Central Bank and build a Trading Company. The paper currency became far more stable than the gold and silver currency standard. As the printing of paper money grew multiple times, inflation rose up. John Law had to flee as his executions failed caused by huge inflation emergence.

Central Banks created their own Banknote Currency. The purchasing power of currency was ranked by the city’s economy and the level of progress it has. Countries needed a unified currency as many have turned to create their own paper money. Central Banks solved this centralized control of money as they are known to be valued universally as producers of the most valuable Bank Note. 

Bank Note of England
Bank Note of England

The Bank of England created the Act. of 1844 regulating the issue of Banknote. No new bank would be granted the right to print banknotes. The Central Bank of England made a way to depreciate the printing of paper money by buying smaller banks and removing their notes from circulation. The Bank of England became the only paper money in the land. In 1921 the last non-Bank of England stopped printing money.

In the next chapter the World Wars I and II occurred which brought US to be the World’s Reserved Currency.


In-House Articles:

Let There Be Money – Part 1

Why People Should be Running Nodes and What it Means for Their Sovereignty

How Do I Protect My Wealth in The Upcoming Recession?


Previous News-Byte:

Stablecoins: Technical Evolution of Cryptocurrencies

Decentralized Finance: The Unchained Panacea

Bitcoin Transformative Expansion Amidst Pandemic COVID-19


Keep up with Open Finance, Subscribe to our Newsletter

Processing…
Success! You're on the list.