more acute when the copper content of the coins was lowered 17% in 1660 as account holders demanded the return of the copper daler they had deposited since they were now worth more as metal than as coins. It was impossible for the bank to fulfil these requests as the money had been paid out as loans. Kreditivsedlar – Europe's first modern banknotes Palmstruch's second major innovation was the introduction of paper banknotes as a solution to the bank's problems balancing deposits and loans. To cover the amounts requested by the account holders, in 1661 he began to make out credit notes (Kreditivsedlar) in round denominations which were freely transferable and backed by the promise of future payment in metal. These were the first European banknotes. These banknotes became very popular very quickly simply because they were much easier to carry than the large copper daler, especially for making large payments (a note could be sent in an envelope — previously the large coins had to be transported by horse and cart). A further reason was that when the amount of copper in the coins was reduced the old coins were taken out of circulation faster than new ones could be minted, meaning that there was a shortage of money which could only be solved by replacing the coins with banknotes. The first banknotes, issued in 1661, were all signed by Palmstruch himself as well as by the other clerks of the bank. These were issued in denominations of 5, 25, 100 and 1000 copper daler (kopparmynt). A second series of these banknotes, known as Palmstruchare, was issued in 1666 in denominations of 10, 25, 50 and 100 silver daler (silvermynt). Failure and legacy The invention of banknotes by Palmstruch eventually caused more problems than it solved. The bank was able to print banknotes on a seemingly unlimited scale and as lending rose rapidly in 1663, the bank's loans ceased to be dependent on the deposits of other account holders. By autumn of that year loans and note issues had reached such levels that the value of the banknotes began to fall. When people returned to the bank to have their credit notes honoured, the bank did not have enough metal reserved to fulfil all these requests and from October onwards the bank was increasingly obliged to refuse, with operations ceasing entirely in 1664. The government and Riksdag (Swedish Parliament)