From Silver To Paper: How Sweden Changed Money In Europe

A New Way To Carry Wealth:

Long before credit cards and digital payments, people relied on coins made from precious metals. In 17th century Sweden, this system became a problem. Swedish coins were often made of copper, and they were heavy, bulky, and hard to transport. 

Carrying large sums meant moving massive copper plates that could weigh several pounds. This challenge pushed Sweden to try something completely new for Europe: paper money.

The Economic Pressure Behind The Idea:

Sweden was rich in copper but lacked large supplies of silver and gold. Because of this, the government issued copper coins that were much larger than coins used in other countries. Some were the size of dinner plates. 

While they held value, they were impractical for everyday trade. Merchants, farmers, and travelers all struggled with the physical burden of using them. This created a strong need for a lighter and more efficient form of money.

Stocholms Banco And The First Banknotes:

In 1660, Stockholms Banco, founded by Johan Palmstruch, issued Europe’s first banknotes. These notes represented stored copper coins held by the bank. Instead of carrying heavy metal, people could now carry paper that promised the same value. 

This idea was inspired by earlier paper money systems in China, but it was completely new to Europe. The notes made trade faster, safer, and easier, especially for large transactions.

Early Success And Serious Problems:

At first, Sweden’s paper money worked well. People welcomed the convenience, and banknotes spread quickly. However, problems soon followed. Stockholms Banco printed more notes than it had copper to support them. 

This led to inflation and a loss of trust. By 1668, the bank collapsed. Despite this failure, the idea of paper money had already proven its usefulness and could not be undone.

The Riksbank And Lasting Impact:

After the collapse, Sweden established the Riksbank, which is now the world’s oldest central bank still in operation. The Riksbank learned from past mistakes and introduced stronger controls over money supply. 

Other European countries paid close attention. Over time, paper money spread across Europe, changing trade, banking, and everyday life. What started as a solution to heavy copper coins became a foundation of modern finance.

A Legacy That Still Shapes Money Today:

Sweden’s early experiment with banknotes helped prove that money did not need to be metal to hold value. Trust, regulation, and smart management mattered more than weight. 

Today’s cash, digital payments, and even cryptocurrencies all trace part of their history back to this moment. Sweden’s decision to use paper money reshaped how Europe, and eventually the world, understood money itself.