Monetary Crisis and Reform in 17th c. Naples" with Lilia Costabile

Abstract:

In 1622 a major foreign exchange and monetary crisis broke out in Naples. We examine the origins of the crisis, going back to the mid-1550s. A sequence of events (in particular policy decisions by the government) led to the replacement of full-bodied coinage by a mixture of inside money, issued by banks, and overvalued small denominations susceptible to clipping and counterfeiting. The clipped coins circulated at par domestically but the local currency depreciated on foreign markets. Contemporaries struggled to understand the problem and various solutions were attempted. When it became known that a planned reform might impose costs on coin-holders the exchange rate collapsed.