Quinn, Stephen; Roberds, William - Federal Reserve Bank of Atlanta - 2006
settle the debt.
The brake on the incentive to debase is the requirement that the debased coins re-
tain some legal value … effectively
limiting deposits to coins above a certain quality. When debt was settled within
the exchange bank, lenders were … of this “law.”
8
For expositional convenience, our discussion will proceed “as if” a debt would always be repaid
in …