This chapter discusses the formation of Norges Bank. Norges Bank was formed in 1816 by resolution of the Storting, Norway’s new parliament. The bank was not given any explicit role in government financing. However, two tasks—providing credit for the public and stability in the monetary system—were fundamental to the bank’s creation and almost every discussion of its operations for the next quarter of a century. Moreover, when chartering Norges Bank in 1816, the Storting resolved that the Norwegian monetary unit—the speciedaler—should be convertible into silver at an exchange rate that was well above the note’s purchasing power and market value at the time. Indeed, one fundamental premise in all of the proposals that proliferated in 1816, influenced by the monetary chaos during the Napoleonic Wars, was that the value of the nation’s new paper money must be backed by silver.
Comment on "The Effects of Exchange Rate Adjustment on International Investments" by Dennis E. Logue and Thomas D. Willett