Also ‘clipping’, that is, shaving off part of the material, was fairly widespread. This led to a phenomenon that many years later became known as Gresham’s law. It says that in commerce ‘bad coins’ drive out ‘good coins’ as the latter are kept for saving purposes. Mistrust in the coin system, or even its entire breakdown, was often the unhappy consequence. Another issue was the plethora of mints that continued to grow in number as technology spread. Fast forward, and at the mid-medieval period it had become fashionable for every European kingdom and principality to issue its own coins. With production costs lower than the coins’ value, this was a useful source of income to finance the frequent wars at the time. But with multiple coins drifting around and uncertainty about their true value, it was essentially a mess. However, where there is chaos innovative minds see opportunities. During the 12th century, in the northern part of Italy, a new type of institution emerged. These specialised in exchanging foreign coins for local ones, not unlike present day foreign exchange dealers. This reduced the problem with the many coins causing much confusion. Even more advanced, some of the new institutions started to swap coins for bills of exchange that could be used in local trade. 3 [15]  The medieval coin-exchange providers brought banking to Europe, it is often said. Initially, they only handled deposits, as charging interest was viewed as usury by the powerful church.
At the same time, this will be the best contribution the euro area can make in terms of promoting strong, sustainable and balanced growth in the world. The cyclical recovery in the euro area is largely supported by developments in private consumption, and more recently also investment. Real GDP rose by 0.3%, quarter on quarter, in the second half of last year. Recent data provide some mixed signals as regards the near-term outlook. While hard data show some improvement in January and February, survey data for the first quarter are consistent with a somewhat weaker growth momentum. Nonetheless, the economic recovery in the euro area is projected to proceed at a moderate pace. Domestic demand should be further supported by the ECB’s monetary policy measures, continued employment gains, the low price of oil and a slightly expansionary fiscal stance. The risks to this growth outlook remain on the downside, however, and relate mainly to the heightened uncertainties regarding developments in the global economy. Headline inflation has remained low and its profile continues to be shaped by the path of energy inflation. In addition the recent partial unwinding of the past depreciation in the external value of the euro reduces the upward price pressure from the external side. Looking ahead, inflation in the euro area is likely to display slightly negative rates in the coming months before picking up later in 2016.