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Economic Commentary

The Tale of Gresham’s Law

Gresham’s law, which says that bad money tends to drive good money out of circulation, may account for many nations’ episodes of money troubles, as far back as ancient Athens. This  commentary discusses the two main explanations for Gresham’s law and suggests some circumstances in which the law does not apply.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Dutu, Richard, Ed Nosal, and Guillaume Rocheteau. 2005. “The Tale of Gresham’s Law.” Federal Reserve Bank of Cleveland, Economic Commentary 10/1/2005.

This work by Federal Reserve Bank of Cleveland is licensed under Creative Commons Attribution-NonCommercial 4.0 International