Domestic monetary transfers and the inland bill of exchange markets in Spain (1775–1885)

This article studies the monetary transfers system that was created by the short-term inland bill of exchange markets. For decades this system was the most practical way of channeling the growing volume of transfers which were taking place as a consequence of the growth of the Spanish economy. This analysis argues that, between 1775 and 1885, the markets involved in this activity became progressively more efficient, due largely to the multilateralization of the payment system. This situation lasted longer in Spain than in the rest of Europe since Spanish banking was, initially, slower to develop. Using univariate and multivariate GARCH models, it was possible to conclude that the inland bill of exchange markets constituted an essential monetary instrument, and one that faithfully reflects the integration of monetary markets in Spain.