The origins of foreign exchange policy: the National Bank of Belgium and the quest for monetary independence in the 1850s

Ugolini, Stefano (2012) The origins of foreign exchange policy: the National Bank of Belgium and the quest for monetary independence in the 1850s. European Review of Economic History, 16 (1). pp. 51-73.

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Abstract

The monetary policy trilemma maintains that financial openness, fixed exchange rates, and monetary independence cannot coexist. Yet, in the 1850s, Belgium violated this prediction. Through a study of nineteenth-century monetary policy implementation, this article investigates the reasons for such success. This was mainly built on the stabilisation of central bank liquidity, not of exchange rates as assumed by the target-zone literature. Other ingredients included: the role of circulating bullion as a buffer for central bank reserves, the banking system's structural liquidity deficit towards the central bank, and the central bank's size relative to the money market.

Item Type: Article
Language: English
Date: 2012
Refereed: Yes
Uncontrolled Keywords: foreign exchange policy, monetary, Belgium
Keywords (French): devises, banques, belgique, Marché monétaire
JEL codes: A1 - General Economics
Subjects: B- ECONOMIE ET FINANCE
Divisions: Laboratoire d'études et de recherches sur l'économie, les politiques et les systèmes sociaux - LEREPS
Site: IEP
Date Deposited: 23 Jan 2013 14:46
Last Modified: 26 May 2016 16:18
URI: http://publications.sciencespo-toulouse.fr/id/eprint/10299

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