Speculation and inflation meant that protecting price stability was an important item on the agenda from the final years of the Age of Liberty and well into the reign of Karl XIV Johan.
The debate centred on myntrealisation, a Swedish term that stands for restoring the value of banknotes in terms of a metallic coin. Realisation means redemption, in this case redeeming the value of the banknotes in metal coins. When notes ceased to be redeemable in 1745, they were no longer based on the fixed value of a metal. For a long time, returning to redeemability was seen as a self-evident objective for monetary policy.
Several attempts were made to achieve this, but it was not until 1834 that a stable silver standard was established.
Time axis
| 1767–1769 |
Drastic deflation.
|
| 1769 |
King Adolf Fredrik refuses to take part
in government and an extraordinary
Riksdag is convened. Most of the
Bank’s directors are replaced;
the currency reform is shelved.
|
| 1771 |
Adolf Fredrik dies and is succeeded
by Gustav III.
|
| 1772 |
Gustav III’s coup d’état ends the rule
of the Estates in the Age of Liberty.
A General Assistance Company
(a pawnbroker) is established.
|
| 1773 |
The Discount Company (a commercial bank)
is established.
|
| 1777 |
Liljencrants’ currency reform with a
silver standard.
|
| 1788–1790 |
War against Russia, financed by
Gustav III with national debt notes
and fahnehielmare.
|
| 1791 |
National debt notes cease to be
convertible and depreciate against
the Bank’s notes.
|
| 1792 |
Gustav III is assassinated; Duke Karl
is regent during Gustav IV Adolf ’s
minority.
|
| 1803 |
Currency reform: a silver standard,
national debt notes convertible.
|
| 1808–1809 |
War against Russia, financed
with national debt notes.
Convertibility is restricted.
|
| 1809 |
Gustav IV Adolf is deposed ;
succeeded by Karl XIII, with a new
Instrument of Government.
|
| 1810 |
Jean Baptiste Bernadotte becomes
Crown Prince as Karl Johan.
|
| 1812–1815 |
Karl Johan eliminates the
government’s external debt.
|
| 1817 |
Private discount companies fail or
are closed; they are replaced by the
National Discount Office, attached
to the Bank.
|
| 1818 |
Accession of Karl XIV Johan.
|
| 1834 |
Currency reform. Silver standard
aids international economic
interaction in the 19th century. |