ABSTRACT
In this chapter, we highlight the main political institutions of the Athenian state and explain how they functioned with regard to monetary matters. All authority for deciding on currency issues rested with the Ecclesia of Demos or Assembly and the Council of 500 or Boule. In the Assembly, citizens decided on a variety of currency-related issues such as voting on minting new series of coins, reminting or demonetizing old ones, expanding the supply whenever necessary by issuing silver, silver-plated and bronze coins, and introducing laws to regulate the parallel circulation of local and foreign currencies. Their decisions were implemented through institutional mechanisms and procedures that pertained to the extraction of silver from the nearby Laurion mines and the production of coins by the state mint, as well as institutional arrangements that ensured the integrity and reliability of the Athenian currency against fraud (meaning production of fraudulent coins). On account of these mechanisms and procedures, the Athenian drachma became the leading international currency in the Eastern (at least) Mediterranean during the whole classical period and later on. Furthermore, we argue that along with the deepening commercialization of the Athenian economy in this period, a vibrant sector of financial intermediation emerged, comprising bankers, moneychangers and pawnbrokers, which functioned much like the financial systems in present-day market economies. Lastly, drawing on the context of this narrative, we conclude that the Assembly of citizens influenced the economy and the money market through their decisions regarding the state’s budget and the currency part of the money supply, whereas the banks did the same through their banking and credit-creating activities.
