4 - First Steps, 1609–1659

Summary

This chapter surveys the first half-century of the Bank’s history, drawing largely on secondary sources because only limited archival material has survived for this period. The original purpose of the Bank, as stated in its 1609 charter, was to take in various types of coin as deposits, facilitate book-entry (giro) payments among Bank customers, and pay out high-quality coins for withdrawals. Ongoing deterioration in the quality of the circulating coin, largely due to debasement, made it impossible for the Bank to adhere to its original mission. Instead, the Bank developed its own unit of account, the bank florin, which was applied to Bank money and was distinct from the unit of account for local forms of money, the current guilder. Having a distinct unit of account made it easier for the Bank to deter money-losing inter-coin arbitrage. This period also witnessed the development of a secondary market in Bank money to facilitate domestic currency exchanges (bank florins for current guilders). This era closed with the passage of the Dutch Republic’s 1659 coinage ordinance, which granted official status to the bank florin.