ABSTRACT
The development of the Swiss monetary system is closely linked to the political evolution of Switzerland from a loose association of independent states to a federal republic.1 After liberal revolutions in the 1830s and 40s, several Swiss cantons deregulated their financial systems, chartering new banks and allowing the free issue of paper money. Private bankers with ties to the aristocracy had dominated earlier Swiss commercial banking, but by the mid-1840s the liberals had gained control of the industrialized cantons in the rolling plains between the Alps and the Jura mountains. A rift then developed between the industrialized cantons and the Alpine cantons on the question of federation. The conflict was aggravated by the fact that the population of the industrialized cantons was Protestant, whereas that of the Alpine cantons was Catholic. After a brief civil war in 1848, the victorious liberals transformed Switzerland into a federal republic. The new federal government removed the cantonal barriers to the free movement of goods, capital and people which had impeded earlier industrialization. It also reformed the Swiss currency system and replaced the large number of cantonal and local currencies with a new unified currency-the Swiss franc.
