16th July 1661: Europe’s first banknotes issued by the Swedish bank Stockholms Banco

**Scott Allsop** (0:00)
On 16 July 1661, Europe's first banknotes were issued by the Swedish bank, Stockholms Banco. Welcome to HistoryPod.
Sweden possessed abundant copper resources and frequently minted large copper plate coins instead of smaller silver coins. These copper plates could weigh several kilograms, making them difficult to transport and inconvenient for large commercial transactions. Merchants and wealthy individuals consequently began depositing these heavy coins with the young Stockholms Banco, which had been established in 1656 by the Dutch-born financier Johan Palmstruch. In return, the bank issued written receipts, confirming the value held.
On the 16th July 1661, the bank began issuing printed credit notes, known as kreditivszedler, which promised payment to the bearer on demand. Unlike deposit receipts, these notes could be transferred from one person to another in everyday transactions, allowing them to circulate as a practical substitute for bulky copper coins. Although paper currency had been used in China for several centuries, the Swedish notes were the first to circulate in Europe.
The new banknotes were initially welcomed because they were lighter, easier to carry and more convenient for trade. The bank also found that paper currency encouraged greater commercial activity. However, Palmstruch gradually issued more notes than the bank could redeem with its available reserves. As confidence declined, increasing numbers of holders attempted to exchange their notes for coins, creating a financial crisis that the bank could not withstand. Stockholms Banco collapsed in 1668 and Palmstruch was imprisoned for his role in the failure. Despite this setback, paper money had demonstrated its practical advantages, and other European states soon began to adopt similar systems.