Gresham's Law

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The maxim named after the 16th-century adviser to the royal court, Sir Thomas Gresham, that “bad money drives out good money, but that good money does not drive out bad”. It arose from the once widespread practice of ‘clipping’ gold and silver coins (i.e. removing shavings from the edges of the coins) or of counterfeiting gold and silver coins. The bad coins (clipped or counterfeit coins) tended to be passed on quickly, whereas the good coins were retained or hoarded.

Subjects: Financial Institutions and Services.

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