Why is the name of Johan Palmstruch important in the history of banking?

          Although Marco Polo brought home the concept of bank notes after his journey to China, Europeans found it unbelievable. It took three more centuries for them to have a few in their pockets.

          The first bank notes were produced by a Dutch merchant named Johan Palmstruch, without whom the history of banking wouldn’t be complete. It was Palmstruch’s private bank ‘Stockholms Banco’ in Sweden that first printed bank notes in Europe. This was in the year 1661. The notes were called ‘Kreditivsedlar’ or credit papers.

          In exchange for the silver coins they used till then, the bank would give its customers credit papers of equal value. The notes soon became ‘popular, as they were easy to use and transport. It is known that Palmstruch himself signed these notes.

            Although successful initially, the bank started to collapse after it failed in return, the creditors’ money due to bad management. By 1668, the bank was shut, and Palmstruch was arrested. He also lost his banking privilege. Though the banker was awarded death sentence at first, he got it reduced to life imprisonment. But he had to be in prison till 1670! A year after his release, Palmstruch died.