A History of Banking
Amsterdam's Exchange Bank
How the Bank of Amsterdam, founded in 1609, created a stable bank money that made Amsterdam the centre of world trade and finance.
In 1609, the city of Amsterdam founded the Wisselbank (Bank of Amsterdam).
The problem
- Traders faced a confusing mix of coins, many clipped or debased.
- Payments were slow and uncertain.
The solution
- Merchants deposited coins at the bank.
- The bank credited them with bank money of stable value.
- Payments were made by transferring balances between accounts.
Results
- Bank money often traded at a premium over coins because it was reliable.
- Amsterdam became the world’s leading financial centre in the 17th century.
- The Dutch East India Company (VOC) and the Amsterdam stock exchange flourished alongside it.
Decline
The bank weakened in the 18th century after secretly lending to the VOC and the city, and closed in 1819.
Lesson
A trusted, stable money supports trade and finance; secret risky lending destroys trust.
The bank transfer
Two merchants settle a large trade by moving balances in the Wisselbank's ledgers instead of counting coins.
Thinking digital-style transfers are new
Amsterdam merchants paid by ledger transfers in the 1600s.
Key takeaways
- The Bank of Amsterdam was founded in 1609.
- It turned coins into stable bank money.
- Amsterdam became the leading financial centre.
- Secret lending weakened it; it closed in 1819.
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