| Popis: |
Between 1860 and 1866, monetary and banking policy in Brazil went through multiple changes. Starting with the 1860 Law of Impediments (Law 1083) and accompanying legislation, the government instituted a timetable for issuing banks to resume convertibility of their notes exclusively into gold. Eruption of a financial panic in 1864, centered on the operation of the private banking house of J. Souto, revealed that the government’s focus on the regulation of joint-stock banks alone was myopic. By acting as a lender of last resort during the panic, the Bank of Brazil increasingly distanced itself from the government’s goal of reinstating convertibility of notes into gold. Growing budget deficits associated with the Paraguayan War, which had started in December 1864, ultimately led the government to rescind the Bank’s issuing powers in September 1866, ushering in a long period dominated by the Treasury’s monopoly of note issues. |
