Currency Principle

Discipline: Economics

Currency principle is concerned with the metallist belief that the money supply or currency in circulation should be strictly related to the amount of gold deposited with the Bank of England. If this money supply were controlled, monetary stability would follow.

The Bank Acts of 1844 and 1845 embodied currency principle and helped establish the framework of modern British banking.

Also see: bimetallism, classical theory of money, free banking theory, real bills doctrine

Source:
F W Fetter, Development of British Monetary Orthodoxy 1719-1875 (Cambridge, Mass., 1965)

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