Lucrezia Reichlin, Adair Turner, Michael Woodford
The COVID-19 pandemic forces swept away some of the conventional taboos in economic thinking, such as the radical idea of helicopter money (Benigno and Nisticò 2020, Cukierman 2020, Galì 2020, Yashiv 2020, Kapoor and Buiter 2020, Velasco et al. 2020). The term uses the fanciful imagery that was originally invented by Milton Friedman (1968). Since the end of the 1990s, Friedman’s idea has received more attention in academia and policy circles.
Precedents to the unprecedented
But what we today refer to as ‘unprecedented’ monetary policies can often have historical precedents (Ugolini 2020). In a recent paper (Goodhart et al. 2021), we wonder whether the economic policy implemented during the years 1629-1631, when the Republic of Venice fought first a famine and then a pandemic, can be considered an historical case of helicopter money. In its relationship with the role of the state, money circulation and banking, the Venetian economy was special. Venice reached a degree of monetisation unknown for centuries anywhere else. In order to economise on coins, citizens commonly used cheques and bank transfers – even the lower and middle class. The Republic issued both coins and, starting from 1587, scriptural money (bank deposits), through the establishment at different times of two overlapping public banks: the Rialto Bank and the Giro Bank (Ugolini 2017).