Authors: Rodney Edvinsson (Stockholm University) and Roger Svensson (IFN, Sweden)
Ingress
While many medieval rulers debased their coinage and triggered inflation, Sweden offers a surprising counterexample. From 1277 to 1540, Swedish prices remained stable despite several external shocks. Our study in the European Review of Economic History explains why.
A long-run puzzle
Economists and historians have long viewed medieval debasement as a sign of fiscal desperation. When governments reduced the silver content of their coins, they could mint more coins from the same amount of metal, gaining seigniorage revenue but usually at the cost of inflation and lost confidence.
Sweden’s experience between the late thirteenth and early sixteenth centuries defies this pattern. For more than two hundred years, the Swedish Crown repeatedly debased the coinage—reducing its silver content from about 46 grams per mark of account in 1290 to only 16 grams by 1490—yet nominal prices remained remarkably stable. Grain, the main staple of the medieval economy, changed little in price over generations.
A data-based reconstruction
Written evidence of Swedish monetary policy before 1540 is scarce, so our study relies on indirect historical data: exchange rates between mark pence and mark silver, silver content in coins, and long series of grain and commodity prices.
By combining these sources, we constructed two indices: a consumer price index (CPI) and a silver price index, allowing us to trace how prices evolved both in nominal and silver terms (see Figure). The results are striking; while the silver price index shows a continuous rise in silver’s purchasing power—reflecting the scarcity of bullion during the Great Bullion Famine (c. 1390–1465)—the CPI remained flat for most of the period.
This means that debasement matched the appreciation of silver. As silver became more valuable, Swedish authorities reduced the silver content of coins just enough to maintain stable nominal prices.
Figure (3). Evolution of consumer prices in Sweden, 1290–1540 (1500 = 100, logarithmic scale).
The black line (deflator index) shows consumer prices in nominal terms, measured in the medieval Swedish currency unit “mark pence.” Despite centuries of coin debasement, nominal prices stayed broadly stable from 1290 to 1500. The grey line (silver price index) expresses the same prices in grams of silver: here, the steady downward trend reflects the increasing purchasing power of silver. The contrast between the two curves demonstrates that coin debasement effectively offset silver’s appreciation, maintaining long-term price stability in nominal terms.
Two possible strategies
We consider two explanations for this pattern:
- (1) An implicit price-stabilization strategy. Debasement could have been a pragmatic response to silver scarcity, intended to maintain liquidity and avoid deflation. By gradually reducing silver content, the Crown kept enough money in circulation to support trade and taxation.
(2) A seigniorage strategy. Alternatively, debasement may have been primarily fiscal. When the market price of silver rose above the mint price, minting ceased. To keep mints active and maintain seigniorage revenue, the Crown had to reduce the silver content of coins—effectively raising the mint price of silver.
These motives are not mutually exclusive. A policy that ensured continuous mint inflows also supported stable prices. Even if the aim was fiscal, it could only succeed if confidence in money was preserved.
Optional payments and flexibility
An important part of Sweden’s stability was the system of optional payments. Many contracts and taxes could be settled either in coins or in commodities such as grain, iron, or cattle. This flexibility cushioned the economy against silver shortages. If coins were scarce, people could pay in goods instead, keeping transactions flowing.
Such a multi-commodity standard reduced the risk of economic breakdown and helped the Crown and private actors navigate the volatility of silver supplies.
Debasement as adaptation
Our data show that Sweden’s debasement was slow and continuous, averaging about 0.5 percent per year. Only a few short periods—around the 1350s, 1360s, and early 1520s—saw emergency debasements linked to war, pandemics or crisis. These were followed by revaluations that restored the previous standard, suggesting that authorities viewed them as temporary measures.
In the longer run, the Swedish monetary system adapted gradually to changing market conditions. This “adaptive debasement” avoided the instability seen elsewhere in Europe, where abrupt changes in coin quality often provoked inflation and loss of trust.
Stability by design—or by default?
Whether Swedish rulers consciously pursued price stability is impossible to know. No explicit statements of policy survive. Yet sustaining two centuries of stable prices required a consistent response to the rising value of silver.
Following the model proposed by Karaman, Pamuk, and Yıldırım-Karaman (2020), Sweden may exemplify a low-fiscal-capacity state that achieved stability precisely because it lacked the means to overuse monetary policy. Without the power to manipulate the currency aggressively, Swedish authorities maintained stability almost by default.
Lessons for monetary history
Sweden’s experience reminds us of that price stability in premodern societies could emerge without modern institutions or explicit central-bank targets. Adaptive adjustments to material constraints—here, the interplay of silver supply, mint incentives, and public confidence—could yield remarkably stable outcomes.
The Swedish case also challenges the idea that debasement was inherently destructive. When managed gradually and predictably, it could serve as a flexible mechanism for monetary adjustment, balancing fiscal needs and economic stability.