Sep 11 – 16, 2022
University of Warsaw
Europe/Warsaw timezone

The Secrets of Emergency Debasements

Sep 15, 2022, 2:00 PM
Auditorium Maximum - Hall D

Auditorium Maximum - Hall D


Roger Svensson (IFN, Stockholm)


The paper analyzes how minting authorities can increase seigniorage through emergency debasements. It examines mechanisms and incentives created by the authorities to withdraw bullion and old/foreign coins from circulation for re-minting. Firstly, in the early phase of an emergency debasement cycle, there are price-lags between the price of silver and consumer prices, since the latter prices are “rigid”. This created an incentive for the people to surrender their bullion and foreign coins for minting. Secondly, in a later phase of a debasement cycle, both good and bad coins will circulate side by side. If the common people cannot see the difference between good and bad coins, experts (for example silversmiths) can collect good coins and hand them in for re-minting and make an arbitrage. Theories are supported by empirical data from France and Sweden. The papers closes with an analysis of social groups who might profit or suffer from emergency debasements.

Primary author

Roger Svensson (IFN, Stockholm)

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