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This paper outlines a model of the …rst true central bank, the Bank of Amsterdam, founded in 1609. Employing a variant of the Freeman (1996) model of money and payments, we …rst analyze the problem- atic monetary situation in the Netherlands prior to the founding of the Bank. We then use the model to describe how the Bank could remedy this situation by creating a stable medium for the settlement of commercial obligations.

The Big Problem of Large Bills: The Bank of Amsterdam and the Origins of Central Banking