Search results for "multi-currency regime"

Multi-currency regime and markets in early nineteenth-century Finland

2020

Pre-industrial money supply typically consisted of multiple, often foreign currencies. Standard economic theory implies that this entails welfare loss due to transaction costs imposed by currency exchange. Through a study of novel data on Finnish nineteenth-century parish-level currency conditions, we show that individual currencies had principal areas of circulation, with extensive co-circulation restricted to the boundary regions in between. We show that trade networks, defined here through the regional co-movement of grain prices, proved crucial in determining the currency used. Market institutions and standard price mechanisms had an apparent role in the spread of different currencies a…