Johan Palmstruch

Who was Johan Palmstruch?

Johan Palmstruch was a Dutch merchant credited with the introduction of paper money to Europe. He became a commissioner in the National Board of Trade after his arrival in Sweden in 1647 and began submitting proposals for banking institutions to King Charles X Gustav in the 1650s. The first two such proposals were rejected but the third, which promised half the bank's profits to the crown, was accepted.

Stockholms Banco was thus founded in 1657 with Palmstruch appointed as general manager. The bank itself was nothing new as it was simply an imitation of the successful public deposit banks of Amsterdam and Hamburg, however Palmstruch himself added two important innovations. The first of these was to use money deposited into accounts at the bank to finance loans, however this soon became a problem as the deposits were usually short-term and the loans long-term, meaning that deposited money was unavailable to be withdrawn by account holders. Palmstruch's second innovation, and his solution to this problem, was the introduction in 1661 of Kreditivsedlar, the first European banknotes, which would be exchangeable at any time for the gold and silver coins they were replacing.