Monetization and Relational Structures: The Diffusion of Checks in Buenos Aires During the Emergence of the Banking System

Abstract

Established in 1822, the Bank of Buenos Aires was the first bank in South America. It closed with the crisis of 1826. Its emergence implied the local appearance of two new monetary tools: the bank note and the bank check.The Bank issued bank notes as paper currency upon discounting commercial bills, and its initial metallic convertibility conferred acceptance to bank notes in commercial transactions. In turn, holders of bank accounts issued checks to release money from deposits in favor of their payees, therefore introducing the bank money (that is to say, the usage of bank accounts to make payments) for first time in local market.This chapter delves into the initial admission process of the first bank checks, exploring the network structure employed by these instruments throughout the brief lifespan of the Bank (1822–1826). The importance of the acceptance relies on its role to understand the diffusion of monetary devices derived from financial innovation and the participation of economic actors in the economic institutional changes.The hypothesis guiding this chapter suggests that the main issuers of checks contributed to enhancing its acceptance in the local economy, as they gained leverage in using that means of payment. To demonstrate this hypothesis, this chapter appeals to the tools of Social Network Analysis (SNA hereafter), which allow an understanding of the relational structure of the check’s flows and elucidate the position of the actors within that network.