Please use this identifier to cite or link to this item: https://scholarhub.balamand.edu.lb/handle/uob/578
Title: Free Banking in Belgium
Authors: Mardini, Patrick 
Schuler, K
Affiliations: Department of Economics 
Keywords: Free banking
Belgium
Issue Date: 2014
Part of: Free Banking systems: diversity in financial and economic growth
Start page: 1
End page: 52
Conference: Free Banking systems: diversity in financial and economic growth (4-5September, 2014 : Lund University School of Economics and Management) 
Abstract: 
Belgium had a somewhat free banking system from 1835 to 1850. The country had two major banks in Brussels, the Société Générale and the Banque de Belgique; several smaller banks in the provinces; and many private bankers. The system had restrictions on note issue and legal barriers to entry. Belgium suffered from a bank run in 1838 triggered by the threat of war with the Netherlands. The Banque de Belgique had invested its resources in illiquid assets and did not know how or when to reduce its note issue. It was bailed out by the government but knew that another failure would spell its end. This led the bank to reform its activity, deleverage, and hedge the remaining risk. The Société Générale was not seriously threatened in 1838 and continued as before. In 1848, the French revolution of that year and Frances suspension of convertibility induced another crisis. This time it was the turn of the Société Générale to falter, for the same reasons as the Bank de Belgique in 1838. The government intervened through fiat money, suspension of convertibility and permission to monetize liabilities. The free banking system ended with the creation of a central bank on January 2, 1851.
URI: https://scholarhub.balamand.edu.lb/handle/uob/578
Open URL: Link to full text
Type: Conference Paper
Appears in Collections:Department of Economics

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