page_title: Financial centre
section_title: Rise of Amsterdam
hierarchical_section_title: Financial centre / History / 17th–18th centuries / Rise of Amsterdam
caption_attribution_description: schilderij; gebouw; stadsgezicht Amsterdam; Beurs van De Keyser; Rokin
context_page_description: A financial centre or financial center is defined by the IMF as encompassing: International Financial Centres, such as New York City, London, and Tokyo; Regional Financial Centres, such as Shanghai, Frankfurt, and Sydney; and Offshore Financial Centres, such as Cayman Islands, Dublin, Hong Kong, and Singapore.
  IFCs, and many RFCs, are full–service financial centres with direct access to large capital pools from banks, insurance companies, investment funds, and listed capital markets, and are major global cities. OFCs, and also some RFCs, tend to specialise in tax-driven services, such as corporate tax planning tools, tax–neutral vehicles, and shadow banking/securitization, and can include smaller locations, or city-states. The IMF notes an overlap between RFCs and OFCs. Since 2010, academics consider OFCs synonymous with tax havens.
context_section_description: In the 17th century, Amsterdam became the leading commercial and financial centre. It held this position for more than a century, and was the first modern model of an international financial centre. As Richard Sylla (2015) noted, "In modern history, several nations had what some of us call financial revolutions. These can be thought of as creating in a short period of time all the key components of a modern financial system. The first was the Dutch Republic four centuries ago." Amsterdam – unlike its predecessors such as Bruges, Antwerp, Genoa, and Venice – controlled crucial resources and markets directly, sending its fleets to all quarters of the world.
  During their Golden Age, the Dutch were responsible for three major institutional innovations in economic, financial and business history of the world:
  The foundation of the Dutch East India Company (VOC), the world's first publicly listed company and an early pioneering model of the multinational corporation, in 1602. The birth of the VOC is often considered to be the official beginning of corporate-led globalization with the rise of modern corporations (multinational corporations in particular) as a highly significant socio-politico-economic force that affect human lives in every corner of the world today. As the first company to be listed on an official stock exchange, the VOC was the first company to issue stock and bonds to the general public. With its pioneering features, the VOC is generally considered a major institutional breakthrough and the model for modern corporations (large-scale business enterprises in particular). It was the first precursor to modern multinational corporations.
  The establishment of the Amsterdam Stock Exchange (or Beurs van Hendrick de Keyser in Dutch), the world's first official stock exchange, along with the birth of the first fully functioning capital market in the early 1600s. While the Italian city-states produced the first transferable government bonds, they didn't develop the other ingredient necessary to produce the fully fledged capital market in its modern sense: a formal stock market. The Dutch were the firsts to use a fully fledged capital market (including the bond market and stock market) to finance public companies (such as the VOC and WIC). This was a precedent for the global securities market in its modern form. In the early 1600s the VOC established an exchange in Amsterdam where VOC stock and bonds could be traded in a secondary market. The establishment of the Amsterdam Stock Exchange (Beurs van Hendrick de Keyser) by the VOC, has long been recognized as the origin of modern-day stock exchanges that specialize in creating and sustaining secondary markets in the securities issued by corporations. The process of buying and selling shares (of stock) in the VOC became the basis of the first formal stock market. The Dutch pioneered stock futures, stock options, short selling, bear raids, debt-equity swaps, and other speculative instruments. Amsterdam businessman Joseph de la Vega's Confusion of Confusions (1688) was the earliest book about stock trading. Early techniques of stock-market manipulation occurred.
  The establishment of the Bank of Amsterdam (Amsterdamsche Wisselbank), often considered to be the first historical model of the central bank, in 1609. The birth of the Amsterdamsche Wisselbank led to the introduction of the concept of bank money. Along with a number of subsidiary local banks, it performed many functions of a central banking system. It occupied a central position in the financial world of its day, providing an effective, efficient and trusted system for national and international payments, and introduced the first ever international reserve currency, the bank guilder. Lucien Gillard calls it the European guilder (le florin européen), and Adam Smith devotes many pages to explaining how the bank guilder works (Smith 1776: 446-455). The model of the Wisselbank as a state bank was adapted throughout Europe, including the Bank of Sweden (1668) and the Bank of England (1694).
  In many respects, the 17th-centu
caption: Courtyard of the Amsterdam Stock Exchange (Beurs van Hendrick de Keyser in Dutch), the world's first formal stock exchange. The Amsterdam Stock Exchange was the leading centre of global securities markets in the 17th century.
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