The Wealth of Nations

The Wealth of Nations

by

Adam Smith

Bank money is the generic term for all forms of currency issued by a bank instead of the government. Usually, banks would issue credit backed by their bullion reserves. Banks’ trustworthiness made bank money at least as secure as ordinary money.

Bank Money Quotes in The Wealth of Nations

The The Wealth of Nations quotes below are all either spoken by Bank Money or refer to Bank Money. For each quote, you can also see the other terms and themes related to it (each theme is indicated by its own dot and icon, like this one:
Labor, Markets, and Growth Theme Icon
).
Book 2, Chapter 2 Quotes

It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country. [...] The gold and silver money which circulates in any country, and by means of which, the produce of its land and labour is annually circulated and distributed to the proper consumers, is, in the same manner as the ready money of the dealer, all dead stock. It is a very valuable part of the capital of the country, which produces nothing to the country. The judicious operations of banking, by substituting paper in the room of a great part of this gold and silver, enable the country to convert a great part of this dead stock into active and productive stock; into stock which produces something to the country.

Page Number: 409
Explanation and Analysis:
Get the entire The Wealth of Nations LitChart as a printable PDF.
The Wealth of Nations PDF

Bank Money Term Timeline in The Wealth of Nations

The timeline below shows where the term Bank Money appears in The Wealth of Nations. The colored dots and icons indicate which themes are associated with that appearance.
Book 4, Chapter 3
Institutions and Good Governance Theme Icon
Mercantilism and Free Trade Theme Icon
Money and Banking Theme Icon
...debasing reduces its value, while seigniorage raises it. In some countries, debts are payable in bank money , which is worth more than coin. (full context)
Institutions and Good Governance Theme Icon
Mercantilism and Free Trade Theme Icon
Money and Banking Theme Icon
...which are subject to coin debasing. To protect themselves, small-country merchants often demand payment in bank money , which is worth more than local coin. (This premium is called an agio.) For... (full context)
Institutions and Good Governance Theme Icon
Mercantilism and Free Trade Theme Icon
Money and Banking Theme Icon
...also took gold and silver bullion deposits in exchange for 95% of their value in bank money , plus a bullion receipt. This receipt could be sold to cover the 5% bank... (full context)
Institutions and Good Governance Theme Icon
Mercantilism and Free Trade Theme Icon
Money and Banking Theme Icon
...try to increase it. The Bank of Amsterdam solved this problem by permanently selling its bank money at a 5% agio and buying it at 4%. The Bank’s directors sign a yearly... (full context)