2 Daler SM – Sweden

In 1693, Sweden found itself in a precarious monetary crisis, a direct consequence of King Karl XI's costly wars to defend and expand the Swedish Empire. To finance these conflicts, the crown had repeatedly debased the coinage, notably the silver daler. By reducing the silver content in coins while maintaining their face value, the state created short-term revenue but triggered severe inflation and a collapse in public trust. The currency system became chaotic, with older, purer coins being hoarded or melted down (Gresham's Law in action), leaving circulation dominated by inferior, clipped, and foreign coins.

The situation was exacerbated by the issuance of Sweden's first paper money in that very year. These were crude, handwritten credit notes called transportsedlar, issued by the founder of the Bank of the Estates, Johan Palmstruch, to facilitate large transactions for the state and wealthy merchants. However, these were not true banknotes for public use but rather a form of credit certificate. Their introduction highlighted the desperation for a stable medium of exchange, but they did little to solve the underlying crisis of metallic currency. The copper standard, which Sweden had long used alongside silver, further complicated the system, as heavy copper plate money (plåtmynt) was cumbersome and its value volatile.

Ultimately, the monetary turmoil of 1693 reflected the broader strain of maintaining great-power status on a relatively small economic base. The debasement eroded both domestic purchasing power and international credit, weakening the state's financial foundations. This period set the stage for the more systematic monetary reforms that would follow, particularly after the Great Northern War, as Sweden grappled with the transition from a bellicose empire to a state requiring fiscal stability.