money. However, there are limits. How negative can central bank equity be before fiat money loses credibility? We address … this question using a global games approach motivated by the fall of the Bank of Amsterdam (1609–1820). We solve for the … fiscal support and central bank capital in sustaining trust in fiat money …

are regulated, including the need to obtain a charter to operate and explicit and implicit federal guarantees of bank … liabilities to reduce the probability of bank runs. These aspects of banking affect a bankś choice of risk vs. expected return …, which, in turn, affects bank performance. Banks have an incentive to reduce risk to protect the valuable charter from …